Replies to This Discussion

Permalink Reply by GoshDarn on August 3, 2012 at 6:48

Henry:

There might also be a few so-called "smoking gun" pieces of evidence, e.g., internal CHK e-mails which actually delineate the criminal intent of fraud.  Or, y'know, maybe a CHK employee will listen to their conscience and step forward and spill the beans, so to speak -- and cough up some damaging documents (and thus leak such to the Attorney General).

Plus, it's a known fact that certain GHS members were flat-out lied to (which implies intent to fraud) when the landowners had proceeded to ask for a "free royalty" clause (in their leases) and then were suckered by a scam Chesapeake lease clause in their lease "Exhibit A's" . . . which served to circumvent the landowners' no-deductions' requests (before signing such leases) . . . being as they didn't want to have to pay for erroneous deductions (which they ended up having to pay for per the appearance of "intent to fraud" via the CHK scam clause).

But nonetheless, as always, your thinking is quite accurate, IMO, being as your objectivity as to what the truth actually is in regards to the obvious shell game that CHK engages in via its subsidiaries per NG pricing, i.e., your counsel is well balanced as to the legalities of the various issues.  Indeed, your months of research and your effort to nail down the associated database as to the Chesapeake's royalty payout prices is heroic.  So many GHS members have shared their royalty-statement data with you, which means that you have solid facts as the particulars of CHK manipulating the NG prices in La. per their web of leases and subsidiary deals.     

And to repeat -- per your above reference -- any landowners who feel that they've been lied to or taken advantage of by Chesapeake vis-a-vis sham NG pricing . . . should contact:

Ryan Seidemann at the Louisiana Attorney General's office in Baton Rouge by calling:  225-326-6085.

Seidemann's e-mail addy is:  SeidemannR@ag.state.la.us

Good luck to all the honest/hard-working landowners.

GD

 

 

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Permalink Reply by Andrew on August 3, 2012 at 7:14

If they are paying less per mcf than people in the same unit are getting from another Lessee, that's all the smoking gun you need. If anyone finds that a lawyer could have a field day.

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Permalink Reply by Skip Peel - Mineral Consultant on August 3, 2012 at 7:26

Andrew, I wish it was that simple.  There are numerous examples of that exact situation and yet no successful litigation on behalf of  HS mineral owners at this time.  Although I know of a couple of suits covering this specific issue nearing their trial date, I'm not sure they will be tried.  The industry seems to have a strategy to fight, delay and fight down to the wire and then to settle when they think they could loose.  They do not wish to see a precedent set that will lead to other litigation.  And the plaintiffs are so tired and ready to settle that they willingly  accept and agree to hold the settlement confidential.  Mineral owner plaintiffs occasionally prevail at the district court level but the industry will appeal and the appellate court is packed with pro-business judges that favor the industry.  Beating the industry at the appellate level is rare indeed.

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Permalink Reply by GoshDarn on August 3, 2012 at 7:30

Andrew:

It's a fairly well-established fact that CHK is, in fact, paying roughly 25% less to royalty owners in the Haynesville Shale area to buy their NG.

Going back probably well over a year (or longer) -- Henry has been receiving the royalty-statement documentation from GHS members who have noticed the NG-pricing discrepancies between various operators.

And, y'know, over and over again, per many months of crunching the numbers, Henry has clearly established that the royalty owners under lease to CHK have literally been taking about a 25% haircut in NG pricing (each and every month) -- for years.

Oh, Henry also has a running thread on GHS as to the particulars of such operator pricing, and he includes a spread-sheet attachment as to what he's uncovered.

Note:  I think that there are members who have deals with different operators in the exact same unit (and/or in nearby sections pulling from the same formation into the same pipeline) which have clearly stated that CHK is skimming into one of their subsidiaries so as to pay less for the NG. 

So maybe Henry will chirp up (or maybe someone else will) and post a link to that data.

GD

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Permalink Reply by Henry on August 3, 2012 at 8:06

Let me clarify a little bit....  My numbers don't show that CHK pays 25% less across the board.  What my numbers suggest is that for leases in which deductions are allowed for things like transportation, marketing, treatment, etc., CHK appears to charge the lessor more for those things, relative to what the other operators charge the lessor. The amount they charge tends to run between $0.75 - $1.00 per mcf, while for other operators the charges tend to be between $0.35 - $0.75 per mcf.  

I also find that many operators explicitly show those charges on the monthly statements, while CHK does not.  I have heard rumor that CHK has started modifying their statements to show these charges, but I don't know if this is now universal.

The most telling data are found with the lessors who receive checks from Plains and CHK, as a result of the JV.  Plains pays the lessors for 20% of the gas and CHK for 80%.  Same well, same gas, same lease.  I have heard multiple reports that Plains always pays a higher price.

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Permalink Reply by Roy Austin Smith on August 3, 2012 at 7:33

Thanks: I know that Cheasapeake has scamed me and many others in Desoto Parish Louisiana. No question about it, but proving it is another story. I paid a lawyer a #1000.00 to wriote a few demanding letters to them. The answers were just rambling garbage. About the same kind they gave me when i emailed or phoned them. I could not afford  to Pay anymore. accomplished zero. Lawyer said they were most certainly running a scam.  In case anyone does not know, they are withoulding Hidden expenses ouf of landowner money before you get paid. took me three or four months to find out. Every employed gave me the runaround, till one slipped up and sent me a copy. I asked , by email for two more months copy. Never recieved it. Phoned three or four different employee, "yes we will send it" Never received it. Phoned and ask about it again, the employee, very rude, told me they did not have to send out copies and they were not going to send me one. as i said, very, very rude. I have one copy. None of the employes would tell me that they were holding out expense. One just sent me copy.,If the expenses come out of my money, i should be able to deduct them on the income tax, instead, i am sure Chesapeake is taking the deducts. Plus, the last land i leased to Jw Associates in Shreveport, they threaten me , they already had lease and it was running out, to drill a well on it before the lease was out, if i did not take their offer. I told them i had been hearing that story for about forty years and nothng but two shallow well were drilled years ago and they changed the section and kept me out of it., so go ahead and drill. they did not drill. I got a little better lease but not the big money. they drilled, paid fairly good for a few m onths.   the last check for two months was $75.00. They have a scam going, just about everyone one on shale knows about it, but proving it is another story.  by the way , if you don't know it, they have a employee on here monitoring the post, although she will send your gripes in to the company, but like me, you proably will not get a answer.

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Permalink Reply by Roy Austin Smith on August 2, 2012 at 12:44

Impossible for one person to sue Chesapeake and they know it.if you had two three hundred landowners and a lawyer that would take chance, you might sue, but in the state of Louisiana. the mineral board, the justice department etc will be on their side. They proably gave away about one million to diferent places around Mansfield, Louisiana, while in debt to the tune of 22 billion with the Ceo taking millions  from the company.

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Permalink Reply by Andrew on August 3, 2012 at 8:50

Roy is probably right, one person would have a hard time suing CHK and winning. However, I believe this will only make their inevitable comeuppance at the hands of hundreds of plaintiffs more devastating. If it's not here, it will be somewhere else, but eventually they will get nailed. If someone had enough money to invest in a substantial discovery phase they could get the expense accounting on costs (after about 250 cross-motions and 5 years), at which point it would be possible to empirically show if they are intentionally trumping up costs. If that happens - bam. 

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Permalink Reply by phaco on August 6, 2012 at 11:43

I think our only chance is to apply pressure to our local politicians.  Get a group of vocal land and mineral owners to ask the questions to our politicians who are supposed to be representing US at the city, parish, state, and national level.  I am taking the stand that if they are not supporting their constituents on this matter then they need to be voted out.

Election time people.  Get involved.  Groups get excited and organize over a salamander, tree frog, or ground squirrel.  We must get organized over our mineral rights.

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Permalink Reply by Skip Peel - Mineral Consultant on August 6, 2012 at 11:55

Few "local" politicians have any responsibility or regulatory authority to address the issues being discussed in this thread.  However there are a handful who do have the responsibility and indeed the authority to do something about them.  They are the judges who sit on the 2nd. Circuit Court of Appeals.  They are elected in defined districts by registered voters who rarely consider substantive issues but tend to vote for incumbents or the candidate with name recognition.  To put it bluntly, the majority of the judges are pro-business Republicans whose allegiance is to the O&G industry, not the land/mineral owner constituents who return them to office again and again.  The state legislature would be next in line to address the issues but that is a much more daunting political task.  Electing judges to the court of appeals who represent the interests of land/mineral owners is doable IMO.

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Permalink Reply by Larry G Smith P.E. on August 6, 2012 at 12:02

I think we need to get the information on wrong doing by all companies. One item is they are not paying Royalty owners but are they paying the TAX to the State for the gas that they are taking from our property. Now this could be of interest to the State Attorney General's office.  I plan to go to BR this week and meet with that office. I have several e-mails sent to me by CHK and XTO about Why they are with holding payments.

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Permalink Reply by LN on August 7, 2012 at 6:36

^^^Larry, Please continue to keep us up-to-date

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