Replies to This Discussion

Permalink Reply by Lee White on December 27, 2012 at 22:45

Many attorneys are specialists in oil and gas. Some law firms also have other specialists in oil and gas working for them.

By the way are you Mark Smith of J. Mark Smith and Associates?

It is time the people of Texas and other states demand their state congress critters enact better laws for the people instead of for the gas and oil companies.

If they don't appease the people they won't be in office. It is time for people to start looking at their state elections more closely.

Maybe the best way would be to have what needs to be done to help the people put on a ballot and by-pass the elected politicians.

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Permalink Reply by Mark384 on December 21, 2012 at 10:35

I feel your pain. Not sure what the marketing 
and fuel compresion fees are all about. The fuel fee sounds like some type of deduction for propane production, but it also could be some fee associated with either the compresion of the gas for either transportation or sale purposes.

For me, it's the severance taxes (on the oil) and the Gas Transportation fees that eat up the larger part of my paychecks. In my own case, my first paycheck (for the first two months) was a pretty good one. But when the second check arrived for.the third month, 
The Gas Transportation Fees (for the first three months) were deducted which had the effect of reducing the gross for that check from almost $ 1,600 down to about $ 1,032.
And that's not counting all of the Severance Taxes and fees deducted for the first check.

However, that well produced a lot of Oil (in the beginning). If your well is producing a lot of gas, and not as much oil, try to keep in mind the fact these O&G Companies can only make a profit off the gas part if they get more than $ 4.00 per MCF for it. The "Market Price" for Natural Gas right now is only about $ 3.40. Usually, when it's sold, they get a little more than Market Price for it.

But if your well is producing minimal amounts of oil, and a lot of Gas, then the Gas Transportation fees have the potentual to be enormous. Sometimes, you also get cases where a lot of people don't lease which cuts into O&Gas Company profits even more. 

If they are deducting this amount from every paycheck, then I admit that does seem pretty "extreme," to say the least! But if they are deducting that fee (for the first three months) from the third paycheck, then that is 
What we refer to as "The Business." They have probably already stipulated that they hsve the right to do so in the lease.

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Permalink Reply by Lerret on December 27, 2012 at 9:00

Post-production expenses are in your lease. No body seems to want to pay attention to them until they bite you in the rear.  As a well diminishes in production, it will cost more and you will get less per MCF. Welcome to the world of well paid lawyers. Such clauses did not exist 40 years ago.

If the transportation company is owned by EOG as a subsidary then you might have a case. If not then you are beat before you start. You agreed to let them take out unlimited fees and that is what they are doing.

Leases are contracts. - I bet most people never read it or didn't understand it and didn't consult someone who did or they would have demanded that clause be eliminated or capped at say 20% of the check.  Sorry. But I'd see who the buyer /transporter is and if the transaction for marketing and transportation is a related company then take it to a lawyer. I'm not optimistic at your chances but if do do decide to go with it, you need to find other royalty owners and take it as a class action.

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Permalink Reply by Henry on December 28, 2012 at 0:33

Kevin,

I have not seen your statement, so take this posting in that context.  When the price of gas was at its lowest this Fall, many people were getting a price of only about $2 per mcfe.  It is possible that the transportation, marketing, compression, etc. ran about $1 per mcfe, which may be a little high, but not impossibly high.  That would explain why EOG took half of your royalty. As the price of gas rises, these costs should remain roughly fixed, and you may find that the percentage EOG takes out will decline.

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