The article below was sent to me. I am somewhat bothered by the "10-year, 100 percent fixed-fee gathering agreement." That seems to eliminate any competition or motivation to keep gathering costs down. Given the concerns we already have about CHK's higher-than-average deductions for their royalty owners, this does not sound good to me. Does anyone else have a better interpretation of what this means?
Midstream paying $500 mln cash
* Involves 220 miles of pipeline in Louisiana
HOUSTON, Dec 16 (Reuters) - Chesapeake Midstream Partners L.P. CHKM.N> said on Thursday it plans to buy a natural gas gathering system and related assets in the Haynesville Shale from a subsidiary of
Chesapeake Energy Corp (CHK.N: Quote, Profile, Research, Stock Buzz) for $500 million cash.
The acquisition will be financed with a draw on the partnership's revolving credit facility of about $250 million plus $250 million of cash on hand.
The partnership will acquire Chesapeake's 100 percent ownership interest in the Springridge system which consists of 220 miles of gathering pipeline in Caddo and De Soto Parishes in Louisiana .
At closing, the partnership will also enter into a 10-year, 100 percent fixed-fee gas gathering agreement with Chesapeake Energy.
After the deal, Chesapeake Midstream will have about $500 million of additional borrowing capacity on its credit facility.
In Texas, Section 91.504 of the Natural Resources Code requires producers to itemize deductions. But, the mineral owner must request this in writing and it must be sent certified mail. Otherwise you won't get squat as far as an explanation. I requested this in 2010 because it appeared "unnamed company" was "netting out" expenses from the price of gas being sold on the market. Meaning, if gas was selling for $4/thousand cubic feet... and the company's expenses were $1 per thousand cubic feet for transportation or whatever... the royalty owner would be paid at $3. As i understand the law, companies can't reduce the price of gas by netting out expenses. They would be required to pay royalty owners the $4 and show deductions/expenses (if required and allowed by lease) on your pay stub.
After my request... the price they paid... again appeared to reflect the cost of gas at the time of production. but after looking at the October 2010 statement... we're getting less than a dollar per thousand cubic feet than any other producers adjacent to our wells. There are no deductions on the payment stub. I'm not a lawyer... i only understand a tenth of oil/gas law. It's all very disheartening especially if you're a royalty owner and a stockholder. it would be nice to see a "friendly" investigation from state regulators in Texas and Louisiana. But we all know the laws are written to favor the industry. Which in an odd way is OK. Producers risk a lot of money to get needed energy supplies. But when landowners sign leases, it's for a lifetime and we'd like to be treated fairly.
Correct on all counts. Plus they have more lawyers and more money. Seems a good route might be through honest members on their board of directors. thanks
This "unnamed company" advertises on its web site about how you may contact their board. Give it a go...
Chesapeake Energy Corporation Board of Directors
c/o Jennifer M. Grigsby, Corporate Secretary
P.O. Box 18496
Oklahoma City, OK 73154
And better yet,
Contact or write your local representative to the state legislature. Ask him/her to propose a transparency in reporting law. Require any operator who takes oil or gas out of Louisiana lands to provide the gross price, and an itemized listing of each deduction, leading to the net price, on each monthly statement. If enough people in NW Louisiana leaned on their legislators, this could happen. How could anybody be against transparency?
So Linda, let's draft a letter on that, and let everyone send it to their representative. OK?
Good idea, Henry. I think we saw the similar, and good, results when addressing the water issues.
thank you, Ben 80)
I'd like to add to that ... a well worded letter, sent "return receipt."