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Permalink Reply by JD on August 2, 2010 at 15:07

I have wondered the same thing. Today I received my first check from Chesapeake. The price for gas for the period in question is lower than the price I received from smaller operators drilling in the Hosston formation. It makes me a little uncomfortable when I read on the check stub this statement about Gross Value; "It may reflect the price received from an affiliated purchaser." Afiliated purchaser? Sounds like a conflict of interest. Thoughts anyone?

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Permalink Reply by Henry on August 2, 2010 at 23:19

Adubu,
About a month ago I started a discussion where I said I would collect data on the price everyone receives for their gas, and try to make sense out of it. For example, did some operators consistently pay a higher price than others? How much of a difference did cost-free royalties make? Were there differences by region?

Well, no one offered up any data for me. Maybe you can spur people to offer up info on the price they are getting, and let's see if we can discern whether any operator stands out as paying less (or more) than others.

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Permalink Reply by adubu on August 3, 2010 at 0:10

Henry--I read with interest on your thread and believe I replied I knew that prices were varible depending on broker and where gas was delivered to what location but as you tried to find out and now I am asking similar question --How can we verifiy if they are paying the royalty owners correctly? Henry you and I are looking for same thing in general I think so maybe some on our knowledgeable members will give us some insight to how can we be for sure about correct payment.

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Permalink Reply by adubu on August 3, 2010 at 14:22

HENRY----LOOK AT MY LAST POST NEXT PAGE TELL ME WHAT YOU THINK__APPLY THRU KEITH AND START NEW GROUP --"WHAT PRICE NG DID YOU RECEIVE ON YOUR ROYALTIES"---MONTH-- UNIT --LOCATION-- OPERATORS NAME--TWO CATAGORY (1) ROYALTY FREE CLAUSE(2) NO ROYALTY FREE CLAUSE----maybe people will post their info for all to share. Then you can as you said put it on spread sheet and summarize for us to reveiw after peroid on time

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Permalink Reply by The_Baron on August 3, 2010 at 4:19

Gentlemen,

some general thoughts and observations.

If you don't trust the operator, you will need to send a request by cert. mail for the info you seek. If they fail to provide or you are not happy with what you get, your remedy would be in court.

That being said, in respose to JD's comment about his check from CHK.

"Today I received my first check from Chesapeake. The price for gas for the period in question is lower than the price I received from smaller operators drilling in the Hosston formation."

This is typical of CHK. remember, CHK is a large operator, and a pro at screwing theRI and WI. They typically sell their gas at lower prices. It is interesting to know that CHK does not directly market most of their gas, this is done by Chesapeake Energy Marketing, Inc. a wholly owned subsidiary of Chesapeake Energy.

The same goes for disputing drilling costs, CHK does not drill most of its wells, NOMAC, its wholly owned subsidary does..

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Permalink Reply by adubu on August 3, 2010 at 4:40

Thanks-- Baron--There is one operator (small independent) I have heard watch out because they will take advantage of you and therefore leads to possible distrust by royalty owner. They demonstrated such when they put pipeline from well to transmission gathering line without sign ROW or paying for damages until we ask and still waiting on same. Yes lease gave them right of engress/ingress for pipeline but lease states Lessee would cover all damage to land,etc. So if I send cert mail letter what all should I ask for? These would not put me in a bad light with them would it or just good business.

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Permalink Reply by JHH on August 3, 2010 at 13:43

Thanks for the information. very helpful.

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Permalink Reply by Kat Bloomfield on August 3, 2010 at 5:40

Read the apposite provisions of the mineral code. email is NOT a written request.
These checks are cut via "software." God knows what's programmed in as "other" expenses.
Business is business. If you need to send a demand letter, do it and do it right and professionally.

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Permalink Reply by The_Baron on August 3, 2010 at 7:21

Some good points, I would send certified mail olny.

Any direct deductions should be listed on the stub, but there is no telling what factors are determined in the price. For example, Operator A may be selling to marketer B. The price given by B may take into account any problems like low pressure, high CO2, other impurities, etc. So the price given to A may be substantially lower than the spot price...and there may be no deductions to be revealed, just a lower price received.

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Permalink Reply by adubu on August 3, 2010 at 7:43

Baron---How can royalty owner ever be assured he is paid truly on what the operator said he was paid for gas and the BTU factor is correct plus deductions are correct $ amounts? If all ask on cretified demand letter for information will they give royalty owner copy of all payment invoices of all transactions or is this asking for too much? Other thoughts?

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Permalink Reply by The_Baron on August 3, 2010 at 7:51

They may give the royalty owner the info, or they may not. There may not be much information to give, other than a statement or receipt from the buyer.

As I said above, if they don't your remedy would be through the court system.

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Permalink Reply by adubu on August 3, 2010 at 7:59

Thanks Baron for your answers. The bottom line is I don't think we can ever know for sure. Just like floor trader on NYSE they have to some degree a license to legally steal from public investors on market orders. Maybe if we sent demand letters for info they may be more cautions with us and not screw us outright by sending up red flags in their royalty department that this royalty owner pays attention to check stubs,etc going to court for the average royalty owner is too costly and they know it plus they have legal department to defend them and litigate it to death and cost little guy too much

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