Land owners beware! This should be illegal.
"To keep royalties low, companies sometimes set up subsidiaries or limited partnerships to which they sell oil and gas at reduced prices, only to recoup the full value of the resources when their subsidiaries resell it. Royalty payments are usually based on the initial transaction."
I've read about this above issue before along with some others but this is just outright theft. We need our states to protect land owners from this. Land owners getting screwed doesn't help future development or economic development. Operators and land owners need to act with ethics for a win/win situation at all times. If they can't, then our elected officials are going to have to act.
Views: 7094
Replies to This Discussion
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Permalink Reply by Larry G Smith P.E. on -
How many of you in your lease have in the EXIBIT "A" of Additional Terms and Provisions Number 28?
In my lease #28 reads "TRANSPORTATION CHARGES- THE ROYALTY INTEREST PROVIDED FOR IN THIS LEASE SHALL NOT BE CHARGED, AND SHALL NOT BEAR, ANY COSTS WHATSOEVER IN CONNECTION WITH THE PRODUCTION, COMRESSION, GATHERNING AND TRANSPORTATION COSTS, EXCEPT COSTS AND CHARGES FOR GATHERING, GAS MARKETING, COMPRESSION, PROCSSING AND TRANSPORTATION INCURRED BY LESSEE TO UNAFFILIATED THIRD PARTIES IN WHICH LESSEE DOES NOT HAVE A BENEFICIAL INTEREST".
My understanding is that what CHK has done since day one has broken the terms of my lease, in that they built a system to transport the gas under a company that they owned and charged that expense to the Royalty Owners.
My work has been keeping me too busy to follow up on this but as soon as I get caught up with my Engineering Field Survey work, I plan to get back on this.
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Permalink Reply by 1kw6x71km1v37 on
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It's a numbers game. Even if you are eventually compensated, thousands of other landowners will remain screwed around the country. As long as they retain (lots) more money than they put out, they're ahead.
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Permalink Reply by ROBERT STEVENS on
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This type of Theft went on for years and years in the Oklahoma Panhandle and South West Kansas.
XTO was and still is the producer (Now owned by Exxon Mobile) of wells in Texas County, Ok. and Southwest Kansas. XTO owned the Pipeline at Tyron, Ok. XTO paid as little as $1.50 per thousand and less for Natural Gas while Dorchester and Exxon were paying $4.00 which was better than the futures market. XTO then sold the Gas to the Pipeline Company that went by another name, while still owned by XTO.
These Wells were drilled more than 60 years ago and the Farmers and Ranchers signed for 1/8 Royalty. All these wells still produce. Called Hugoton Plains Gas Field.
Some Farmers got organized, hired an Attorney and filed suite against XTO and believe it or not the Farmers won. The Farmers and Ranchers got a sizeable check but could only recover for a period of years they were cheated. No one from XTO ever has or ever will go to Jail or paid any type fine for Robbing the Farmers. This was a great win for the Farmers as Oil Companies has the best Attorneys and they keep appealing their Court losses all the way to the Oklahoma and Kansas Supreme Courts and usually win there. I know this for a fact. Dorchester lost a case in the past year concerning using Gas to run their Compressors and not paying for the Gas. It doesn't matter if it is 1/8 3/16 or 1/4 the Gas & Oil slide by ever chance they get. It is their meters, their man that runs the meters and their Office Clerks runs the meter accounts.
It is a shame things work this way but this is the way Oil and Gas business works.
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They and their promoters are known to be somewhat arrogant also, do not forget that.
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Elements of criminal intent are present in the O&G business. They get their hands on the money first. They have positioned themselves purposely in a business where this the way it works. They have no intention of giving your legal share of the money to you, and they know you can't prove that, which would be necessary for a theft charge to stick. They lie and falsely account under the guise of a lease contract, which the probably lied about too in order to induce you to sign it in the first place. As a business transaction, the arrangement taken as a whole is pathetic.
One more thought. You know you're being jacked around for sure when a new one calls you on the cell number you gave the last one.
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They can do it and they will continue to do so. They do it with an arrogant and all knowing approach that seems to rub off on their "agents" and shills. It is a simple fact of doing business and it is the way it is. Now, it has gotten to the point that a long negotiated lease agreement means little if anything. It is amazing the stories I hear from people, not including the royalty owners posting here.
It will get to the point where the outrage and disgust will destroy the whole business, or at least the way it is done now. Screwing over some of the folks like Anisman and Bass in the Barnett, that cannot benefit anyone's business model. Have they become so assured in the corrupt nature of our system they can do this to people with large resources now?
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Permalink Reply by G.L. Jenkins on
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It is hard to do business in the United States today due to the amount of greed in corporations, Law firms, and even the general population. I find it best to read up on matters concerning any business or transaction you are ready to accomplish. Wait at least 48 hours before signing any contract or document consult at least 2 or 3 Law firms without telling them you have another Law firm looking at the contract this way you can make a better judgement as to which one to hire. Most of all remember there is only one person you can trust, YOU. That old saying " Look for the good in people " is no longer viable today. Background checks are required before dealing with anyone.
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Permalink Reply by Larry G Smith P.E. on
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Mr Jenkins, please do not judge the entire population of the USA by the few crooked people involved in the recent development in the Shale Oil and Shale Gas. I have been in business serving the oil and gas industry since 1968. Up to the time that mainly CHK and the CEO Landman got involved, our industry was a very good and honest group of people and Companies. I have worked in every phase of the Oil Industry and still do. I was warned about CHK about 3 years ago, do not attempt to do work for them. I wish I had paid attention to this warning when it came time to lease my land. Did not find out that it was CHK until it was too late but I never thought they were as crooked as I had been told. But we are not all bad, just a few rotton apples that I hope will soon be forced out of business.
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Larry Smith,
If you are in Louisiana, an oil and gas lease can by law be assigned to anyone and a landowner has no control over who it is. They do, however, have some very limited statutory control over an operator who is in place by assignment. Better than nothing.
Texas, I don't know about. Texas is sort of irregular when it comes to oil and gas law. Did they ever get anything codified, or is it all case law and winging it from the bench?
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Permalink Reply by Larry G Smith P.E. on
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Thanks but I was born and raised here in Louisiana, my land is my Dad's Mother's place, he was raised there and finished High School in Pelican. Will just have to keep after this until we get results. Have never quit on anything in my Life and do not plan to start now.
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Background checks are essential. I have used these to good benefit. If someone is sitting across from you telling you how reputable and professional the operator and his leasing company is, check him out on any good online background software. Could be in for a shock. Been there, done that. As to the business just now going bad, dream on. It has been bad but it has been more blatant of late.
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Permalink Reply by Gale on
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Interesting, although I think this has gone on for years. I've wondered exactly who owns Mark West, and Samson years ago changed their name to Samson Lone Star and I alway though it was so they could do this very thing. Does anyone know who owns Mark West? Says they are a master Limited Partnership and it was formed in 2002. I cannot find out who formed them though. I'm not trying to even trying to say the oil companies shouldn't make money because I understand its expensive to drill and otherwise no wells would get drilled but I think they make in excess of what they should. Everyone knows if you want to make the big bucks work in the oil industry.
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