Texas Royalty Owners - "itemized deductions for natural gas"
We received this notice from an offset operator. It sure would be nice to have a similar law in LA as we're getting hit with various deducts to the tune of about 65% gas price realized -vs- NYMEX!
Texas Royalty Owners
Pursuant to HB 981 passed by the Legislature of the State of Texas, we are
required to provide you with the following information:
Section 91.504, Texas Natural Resources Code, gives an owner of a
royalty interest in oil or gas produced in Texas the right to request
from a payor information about itemized deductions, the heating
value of the gas and the Railroad Commission of Texas identification
number for the lease, property or well that may not have been
provided to the royalty interest owner. The request must be in
writing and must be made by certified mail. A payor must respond
to a request regarding itemized deductions, the heating value of the
gas or the Railroad Commission of Texas identification number by
certified mail not later than the 60th day after the date the request
is received. Additional information regarding production and related
information may be obtained by contacting the Railroad Commission
of Texas’ office of Public Assistance or accessing the commission’s
website.
Texas Royalty Owners
Pursuant to HB 981 passed by the Legislature of the State of Texas, we are
required to provide you with the following information:
Section 91.504, Texas Natural Resources Code, gives an owner of a
royalty interest in oil or gas produced in Texas the right to request
from a payor information about itemized deductions, the heating
value of the gas and the Railroad Commission of Texas identification
number for the lease, property or well that may not have been
provided to the royalty interest owner. The request must be in
writing and must be made by certified mail. A payor must respond
to a request regarding itemized deductions, the heating value of the
gas or the Railroad Commission of Texas identification number by
certified mail not later than the 60th day after the date the request
is received. Additional information regarding production and related
information may be obtained by contacting the Railroad Commission
of Texas’ office of Public Assistance or accessing the commission’s
website.
Views: 375
Replies to This Discussion
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Permalink Reply by The_Baron on
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Have you tried to obtian this information in LA and been unsuccesful?
It appears all this law does is require the disclosure of the deductions, not requlate what deductions can be made. Also, nobody gets NYMEX prices (keep in mind the price on TV is not todays price, but a futures price).
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Permalink Reply by king john on -
the statement regarding deductions says...
information about itemized deductions.
this would indicate to me that a royalty owner would be entitled to specific information pertaining to those deductions which were listed.
kj
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Permalink Reply by jffree1 on
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IANAL. This is some of what little the RRC has posted on their website. They have no authority over the payment of royalties and provide only general information. Specific questions probably should be addressed by an oil & gas attorney.
From the RRC to Working Interest Owners:
http://www.rrc.state.tx.us/about/faqs/royaltiesleases.php
(scroll down to middle of page)
WHAT YOU HAVE TO REPORT WITH A PAYMENT (amended effective 9/1/2002)
Section 91.502
1. Property Identification (Name, Number, or both; and County and State)
2. Sales month and year
3. Volume sold
4. Price per barrel or Mcf
5. Severance or other taxes deducted
6. Windfall profit taxes (repealed 1989)
7. Other deductions or adjustments
8. Net value
9. Owner decimal interest
10. Owner gross value
11. Owner net value
12. Address and phone number where additional information can be obtained
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Permalink Reply by awharris on
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Baron,
Yep, operators have not supplied any info other than gas volume and "this is the price we're paying you for your portion" and I don't believe the State publishes pricing information anywhere???
And I was referring to "NYMEX SETTLEMENT PRICES", not daily futures when I said we're only getting about 65% of each month's NYMEX price . Here's what I use: http://www.gsfi.net/common/NYMEXSettlementHistory.pdf
For the wells I normally review, the ratio of price realized to NYMEX is ~80-105% of the monthly settlement. 65% for Haynesville Shale gas is VERY low in my opinion.
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Permalink Reply by Grillin' - MmmMmm on
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Depending on the contract and the lease terms, there are large variances in the amount and type of deductions you may see. Some gathering contracts are fee based...$/mmBtu gathered...while others can be a percentage of proceeds...they gather the gas and sell it and then charge a percent of the total sales amount. This percentage can be as high as 30% to 35%. Plus there are deductions for contaminents...a 1/2% here, a 1/2% there. And finally, the price of gas sold in the ArkLaTex will always be lower than the Nymex and HH prices. The difference can be very volatile, and depends on the volume of gas being moved through various pipelines around the country. Yes, around the country. I've seen it at 30 cents, and I've seen it over a dollar.
You should be able to get an itemized deduction list; just ask.
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