Chk to start deducting "some" costs from royalty cks/post production costs/Texas/Star-Telegram

If previously posted, please disregard...

 

http://www.star-telegram.com/2011/08/10/v-print/3282702/chesapeake-...

 

So kind of Chesapeake..."they will not be retroactively assessed any charges for post-production costs that the company incurred before its policy change."  (Let's just all sit down tonight and write Chk a nice "thank you" note.)

 

And, how neighborly of Chk Senior VP, Henry Hood to throw Total under the proverbial "it's not our fault, it's the other guy's" BUS...or...golly-darn nabbit, it's toooooo hard to write twooooooo checks at one time (by hand, I'm sure)...  It just makes me want to sit down and cry for the poor Chesapeake fella.  What a crock!

 

"...will likely see their royalty checks slashed by roughly 25% after the company deducts expenses associated with post-production, such as gas gathering, compression and transportation."  

 

What's Left????  The Envelope?

 

DrWAVeSport Cd1  8/11/2011

 

 

Tags: barnett, checks, chesapeake, post, production, royalty, texas

Views: 3053

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Replies to This Discussion

A lot of people thinks maybe there is a scam. Could Chesapeake be selling to theirselves or a dummy company then reselling at a higher cost and if so is this legal

IMHO, the answer is we don't yet know.  It appears that CHK pushes the envelope on payments.  For example, we see mineral owners who receive checks from CHK and Plains (under the terms of the JV), where Plains pays a much higher price than does CHK.  This is for gas from the same well, under the same lease,  We've also seen peoples' prices rise when CHK sells out the well to another operator.

 

There are class-action suits in both the Barnett Shale and Fayetteville Shale that address this issue.  I don't think we will fully understand the reason for the low payments from CHK until the plaintiffs are able to go through the discovery phases in these law suits and gather information, and these findings are made public.

 

There was a recent ruling in the Louisiana courts that seems to make it harder for a class-action suit to move forward in this state.  So it may be that the only way to get at this for Louisiana landowners is for a large landowner (or a coalition of smaller landowners) to take CHK on.  My suggestion is that DeSoto or Caddo Parish, if they think they are getting screwed, ought to take this on.

As stated before... in Texas, a royalty owner can request via certified letter, any and all deductions.  Oil and Gas companies are required by state law to send those deductions in monthly royalty checks.  I requested this information several times.  Got one check and it listed no deductions.  Other requests were ignored by Chesapeake.  And we were still being paid up to $1 less than all other companies.  It seems pretty stupid and arrogant for a big-shot energy company to ignore a simple law.  But until they get their come-uppins, this will continue.  At the very least, the CEMI shell game ought to be investigated by someone!

It just seems a shame, that Chesapeake seems to be doing all the right things publicly... discovering and producing cheap and abundant energy supplies.... backing nat gas vehicles... backing nat gas fueling stations... promoting a simple energy policy that lawmakers seem unable to comprehend... but operating what seems to be a scam with CEMI and ignoring requests from royalty owners.  It's a big SHAME!

Out of curiosity JHH, having received no substantive response from CHK, what are you going to do? 
Not sure yet.  sent you an email for the rest of the story.  jhh
Ben and JHH - if you're having troubles getting in touch with Chesapeake, I'm more than happy to help facilitate a conversation. Please let me know if I can help!
and you have one of the toughest jobs in the world.  There's so much baggage that just thinking about it causes higher blood pressure.  at this point we are free and clear of all things chesapeake... except for an unbelievable horrible lease offer on some family property out in Howard County Texas. as i've stated... chesapeake does a lot of right things... but not so much for royalty owners.

Hey JHH - I know it's probably too far, and I hate it's gotten to that point. If ever you need anything, just reach out to me. I'll do my best!

thanks for keeping in there.  you might one of the few who do respond.  thanks.  might  call one day. jhh

All of these expenses should be tax deductable for the royalty owner. How can you use your deduction if you don't receive some sort of statment of the cost?

 

Katie is paid to read this site and do self serving replies on behalf of her employer, CHK. In the mean time, CHK sends out false royalty statements and willfully violates lease agreements. CHK diverts charges for gathering, processing, dehydration, transportation and compression through an affiliate which CHK owns 42.5% of the equity interest and 50% of the general partner interest at margins and with terms inconsistent with sound business practice and without compeitive bidding. CHK does indirectly what it is prohibited from doing directly--charging for post production expenses.

 

The Attorney General of LA should file a complaint under the False and Deceptive Trade Practices Act to protect LA property owners from these practices. Who votes in this state--property owners or CHK?

Sounds like it may be time to bring a class action suit against Chesapeake, get an injunction to place all existing wells into a 'shut-in' status and 'stop work' on all in process until the courts settle the matter. I am sure even the TRRC and the State of Texas would pull its head out of the sand and pay attention to their 'non-standard' practices of the Chesapeake Corporation.

 

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