Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on June 21, 2019 at 8:21

Can you post the specific gross price per mcf for both EXCO and Shell?

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Permalink Reply by full name on June 22, 2019 at 8:29

Skip,

Here are the last six months of prices and well gross income.  Note there is a Shell Gross and Adjusted Shell gross.  When they split the production Exco just halved the owner decimal while Shell halved the Gross Production.  My guess is they did this to try to confuse the royalty owners (Like when the pipeline companies quote some owners by the rod and others by the square foot).

When they started the price was only a few cents apart but has steady increased.  For those wells that have production costs Shell's cost is about twice Exco's.

Also Shell's prices are lower than GEP prices in the adjacent section.

The data is in the attached spreadsheet.

Attachments:

• Shell vs Exco.xlsx, 11 KB

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Permalink Reply by Skip Peel - Mineral Consultant on June 22, 2019 at 9:16

Jay, any thoughts on the discrepancies?  Does Shell have more deduction categories than EXCO?  Would the point of sale be different for each?  Would part of the gross price difference be different reporting pressures/temps?

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Permalink Reply by full name on June 22, 2019 at 14:04

That's why I included the gross price.  Any pressure/temp differences should not matter with gross price since that is what the gas is actually "sold" for and it is running 10-15% less.

Also the GEP price  in the adjacent section was exactly the same as the Exco price for last month (May) and they did not go through bankruptcy.

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Permalink Reply by Skip Peel - Mineral Consultant on June 22, 2019 at 14:07

Then GEP Haynesville did not get stuck with a bad G&T contract from Encana.

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Permalink Reply by Skip Peel - Mineral Consultant on June 22, 2019 at 9:29

Thanks.  I saw your previous reply to that effect but was unsure if that accounted for all of the difference.

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Permalink Reply by Skip Peel - Mineral Consultant on June 22, 2019 at 9:49

Has it become common for BK courts to throw out G&T agreements and allow operators to re-negotiate?

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Permalink Reply by Spring Branch,mineral owner on June 22, 2019 at 11:56

My gas price was clearly higher when Exco marketed 100% of the gas from their partnership wells.  Shell's gas price was clearly higher when they allowed Exco to market 100% of our gas.  Shell clearly knew this but made the decision  to market its half of the gas (and my half of the gas) in spite of the fact. Why would Shell make that decision that was in their financial disinterest and darn sure in my financial disinterest.  Shell has to be getting some sort of kickback to bring their gas price up to Exco's price or either they are stupid and I don't think for a second that they are stupid.  Does Shell not have any fiduciary responsibility to me as a result of the Oil and Gas Lease to sell my gas at the best available price?  It would seem to me that Exco's was the best available price!

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Permalink Reply by Skip Peel - Mineral Consultant on June 22, 2019 at 14:29

So what's in it for Shell?

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Permalink Reply by w.r. frank on June 22, 2019 at 17:07

Who still gets a check from Shell? I used to get checks from SWEPI, but have been getting checks from Vine or BRiX Operating since ECA sold to GEP and SWEPI sold to Vine.

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Permalink Reply by Skip Peel - Mineral Consultant on June 23, 2019 at 1:29

EXCO royalty interests are paid by Shell.  Although SWEPI sold out of the Haynesville RDS later acquired British Gas (BG).  BG had acquired a half interest in the EXCO LA Haynesville units.  When EXCO went in to bankruptcy Shell started paying their half of the royalty to protect their ownership interest.

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Permalink Reply by Spring Branch,mineral owner on June 24, 2019 at 5:47

As a royalty owner, my ownership interest was not affected by Exco's Chapter 11 and as a result it seems ridiculous that I am forced to receive a lower price for my half of the royalty stream so that Shell can market their gas at the lower price.  Can I assume that when Exco exits Chapter 11 and Shell's ownership interest is no longer "in jeopardy", that Shell will then allow my gas to be marketed at the higher Exco price?  Why am I not allowed to choose who markets my gas?

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