Replies to This Discussion

Permalink Reply by Bob on December 8, 2009 at 16:29

Baron, in another thread you stated that it was illegal to hedge the royalty owners share of the gas. What would keep an operator from making a little deal with the buyer to sell the RO share of the gas on the lowest price of the month for a little better hedge price for their share. Sorry but it is just the conspiracy theorist part of my brain working. But if you look at the monthly averages of the price of gas at the wellhead and then look at my statements it doesn't seem that far-fetched.

• ▶ Reply

Permalink Reply by RBH on December 8, 2009 at 11:55

http://www.eia.doe.gov/steo

U.S. Natural Gas Prices. The Henry Hub spot price averaged $3.77 per Mcf in November, $0.35 per Mcf lower than the average spot price in October (Henry Hub Natural Gas Price Chart : http://www.eia.doe.gov/emeu/steo/pub/gifs/Fig4.gif). Prices were depressed as warmer-than-normal weather in November reduced seasonal residential and commercial space-heating consumption by about 1.7 Bcf/d, or about 7 percent, below the projected 22.85 Bcf/d consumption in last month's Outlook. EIA expects prices to increase as space-heating demand rises in the coming months. However, strong domestic production, a retrenchment of electric-power-sector natural gas demand, and uncertainty about the extent of recovery in the industrial sector, should limit sustained upward price movements through the winter and well into next year. The projected Henry Hub spot price averages $3.95 per Mcf in 2009 and $4.62 per Mcf in 2010.

• ▶ Reply

Permalink Reply by Scott on December 8, 2009 at 12:54

Hope their prediction for 2010 is wrong. I saw how Henry Hub spot prices closed at 5.09 per mcf today. Hope we have one hell of a winter.

• ▶ Reply

Permalink Reply by Bob on December 9, 2009 at 11:30

I'll guarantee you when the november royalty payments come it won't be close to $3.77.

• ▶ Reply

Permalink Reply by awharris on December 15, 2009 at 4:09

You're right, it will probably be something close to $2.45-$2.70. We're averaging ~65% of NYMEX monthly closing price each month on our JIB statements. Even compared to Henry Hub, that is extremely low.

I've talked to other non-operating WI owners and there is discussion of a lawsuit. It's the only way there will be any action since our efforts to "ask for the data" have fallen on deaf ears.

• ▶ Reply

Permalink Reply by Spring Branch,mineral owner on December 27, 2009 at 16:18

When did the Henry Hub Spot Price trade at $ 1.97 in September, which is what Chesapeake paid me for my gas??? Course their gas is hedged so they're not too worried what I get for my gas. What incentive do they have to see that they get the best possible price for the royalty owners?

• ▶ Reply

Permalink Reply by BirdDawg, plain ole' idiot on December 28, 2009 at 13:42

Thanks Jim

• ▶ Reply

Permalink Reply by SunKing on December 5, 2009 at 17:56

I'd like to comment on the commodity prices. Royalty payments are calculated on the amount of gas produced per day and the wellhead price on that day. At the end of the month, the gas price that appears on your check is a weighted average of the amount produced and the wellhead price that day. Wellhead prices are lower than the futures prices you see. It is closer to the spot price, but it's not completely correlated. The most commonly reported spot price is the Henry Hub spot price (Erath, LA, used for the NY Mercantile Exchange). All that you hear about "hedged prices" only benefits the producer. As the royalty owner, we are the equivalent of the wholesale producer and as such we get the lowest price.

As Bob mentions, you also need to think about taxes. If this is the first time you've received royalty payments, you really should talk to a tax adviser, even if it's H&R Block. If you get significant royalty payments but don't pay taxes on a quarterly basis, you might have to pay a small penalty. The first year is not as big an issue as the second because of the need to pay a certain percentage of the previous year's taxes because you might be liable for a penalty if you have a strong royalty year.

Paying taxes sucks, but it's an indication you're making money from your land, which is a good thing. What really sucks is paying penalties and interest because it's completely avoidable!

• ▶ Reply

Permalink Reply by Bob on December 5, 2009 at 18:40

Sunking, according to government statistics the september average was 2.92 but my statement says 1.97. I'm not saying it should be exactly that but that seems like a big difference. Now there may be other fees that I'm not aware of because they don't give much information ( for example : maybe pipeline fee? )

• ▶ Reply

Permalink Reply by Spring Branch,mineral owner on December 6, 2009 at 0:28

When one operator pays me $2.49 for September, a second operator pays me $2.39 and a third operator, which happens to be the biggest operator in the Haynesville, p[ays me $1.97, I have to wonder if there is not some fancy footwork on price being done to me by the third operator. Makes me wonder about some quid pro quo at my expense. The price just seems too far out of line!!!!! I am wondering if we shouldn't band together and form a Haynesville Royalty Owner's Association and have an audit performed on Operators when prices seem just too far out of line. Skip, having verification that we are being paid the correct price does NOT seem out of our control in my opinion. The Operators love the fact that we apparently have no way to check and see if we are being paid the correct price. No checks and balances favors them, not us.

• ▶ Reply

Permalink Reply by LP on December 6, 2009 at 0:55

It was suggested to me that the variations in price averages between operators could be due to the well production being stopped for several possible reasons during that month. (my September payment was for $2.30) Maybe that's so. I wouldn't know but I do think the suggestion of having a "Royalty Owners Auditor" is an idea worth considering.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on December 6, 2009 at 2:58

The idea of a royalty owner or mineral owner association has been around the block several times on GHS although not lately. Kassi mentioned the opportunity to establish a chapter of an existing national organization. Caliente tried to drum up interest in forming an independent organization associated with HS production. Neither effort found traction. The idea of an organization to protect the rights of mineral/royalty owners is a good one with one very large hurdle to clear , funding. You can ask Caliente about that but if memory serves mineral owners wished to have the benefits but no one wished to pay for the service.

• ▶ Reply

• ‹ Previous
• 1
• 2
• 3
• 4
• 5
• 6
• …
• 9
• Next ›
• Page