Is anyone else getting unusually high deductions from your royalty checks from Haynesville shale wells?

My most recent royalty payment from Petrohawk has deducted 23% of Gross Owner Value for Transportation, Treating and Gathering costs. When Petrohawk started paying last year, deductions averaged 15% and they've been climbing since. The Lease is not specify on deductions with a general "boilerplate" clause regarding business expenses.

Most of my other payments have no deductions (other than Severance Tax) and 2 other payers deduct less than 3% for similar charges.

What's your experience?

Thanks in advance,

Diane

Tags: Deductions, Royalties

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The amount deducted shown at the bottom.  XTO and SWN.

Chesapeke only shows the tax that is withheld, not the expenses.

You should be able to deduct marketing and gathering fees.  I come out of your income.But when you are dealing with Cheasepeake, the expenses are hidden and they do not want you to have a copy of them. I had a La. lawyer ask them. One employee accidently, and proably got fired sent me on copy.  I did not understand it and ask for two more months copies. was told they did not have to send them and would not send the. one of the reasons i knew something was bad wrong, my neighbor land owner at the time was getting $3.70 for gas from same well. I was $1.70.

Thank you Sir. We had very successful dealings with CH in past years and had no problems with them at all. Excellent landmen. I did not understand something and I called Okla., told the lady what I wanted and she made a copy of my latest royalty account check, highlighted the things that I could deduct and mailed it to me. I was very appreciative. This was about 3-4 years ago.

Happy to hear that. did you ask for a copy of expenses they are deducting and not showing on your check stub.  real nice to me when first started but i wanted to know what hidden charges they were holding out and second i consulted a lawyer.   they are well known for their give aways in Desoto Parish, but are not too free with info that the landowner should know. good luck.

 

 

 

If the royalty owner has a deduction charge of $.80 per mcf and they have a 25% interest ....that would mean the gas company s 75% interest would have a cost to them of $2.40.....So how do they stay in business

 

  

Stroud,

Think of it this way....  Let's say, for purposes of this example, that the operator and mineral owner are each getting $2.50 for the gas when it is sold to market.  If it costs $0.80 to treat, gather, and transport it to market it, then each will receive $1.70 in their pocket.  It doesn't matter what fraction anyone owns.  If an operator only receives $1.70 for his gas, he won't stay in business.  This is why companies are reducing their activities in the Hayynesville Shale, and moving to other areas where there is either oil or natural gas liquids.

Henry and all responders,

Based on this informative discussion, it appears that the only issue for debate with Petrohawk is the accuracy of the deductions.  Given that Petrohawk is now owned by the multinational conglomerate, BHP Billiton, do you think the treating, gathering, transport is done by the company or outsourced to smaller, local contractors?

If it's normal business practice to use contractors, then I should be able to find out the going rates for these processes, correct?

Does anyone know the names of contractors who do these post-production activities?

 

Diane,

Have you used the royalty calculator on this site?  Does it come close to what your statement shows. Do you have royalty on a gas or oil well. I know the calculators are not exact in they don't account for the deductions. I'm just wondering if they are close.

 

Thanks for you time

You are lucky> petrohawk listed the deduction. yOu can deduction on income tax.

Cheaseapeke has been deducting expenses from the first day and not listing them.  They refuse to send me copies of what they are deducting. Lately they have started deduction  what they call production cost, La calls it servance tax and they are listing it.  they production these costs on end of year statement, but hide it on the backside of the paper. just today i found the info.The last time i ask for info on expense deduction, they rudely told me they did not have to give me a copy and not only that they would not send me another copy. 

good luck

Have any of you calculate the estimated money you would receive for a given month? Using the computer estimated value for the month of November 2011, the gross amount was estimated at $1238.75. Cheasapeke sent a check today for the month of November, the gross amount on the check was $1,236.92.  That is a difference of onle $1.83 between the calculated and the actual amount. The only deduction that shows is the State Tax. So far most of the checks are close to the calculated  amout. Only one time they were off, they listed about 58000mcf less volume than what was posted on SONRIS.

 

an a oil company out of texas did my dad the same way what he should have done which i tried to get him to do and anybody else is don,t sign oil lease they send you go to a lawyer and get your on lease made where they can not hold any deductions out of your royality check them charger you for transpertation treated and gather cost is a bunch of bs

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