tranportation costs - GoHaynesvilleShale.com2024-03-29T07:19:43Zhttps://gohaynesvilleshale.com/forum/topics/tranportation-costs?commentId=2117179%3AComment%3A776371&feed=yes&xn_auth=noCaliente:
Agree. This is why…tag:gohaynesvilleshale.com,2009-07-24:2117179:Comment:7935992009-07-24T14:06:01.494ZDion Warr, CPLhttps://gohaynesvilleshale.com/profile/DionWarr
Caliente:<br />
<br />
Agree. This is why I suggest a comparison against a known benchmark as a first-line tool. An out-of-line drop from the 'norm' can be revealed quickly, especially if an operator changes their accounting style or reporting midstream.
Caliente:<br />
<br />
Agree. This is why I suggest a comparison against a known benchmark as a first-line tool. An out-of-line drop from the 'norm' can be revealed quickly, especially if an operator changes their accounting style or reporting midstream. Fred:
I'm sorry that you fee…tag:gohaynesvilleshale.com,2009-07-24:2117179:Comment:7933882009-07-24T10:43:23.456ZDion Warr, CPLhttps://gohaynesvilleshale.com/profile/DionWarr
Fred:<br />
<br />
I'm sorry that you feel that your question has not been answered.<br />
<br />
Do any of the 'addendum items' speak specifically as to what can or cannot be deducted for marketing, treating, or transporting your gas (including, but not limited to, a 'cost-free' royalty provision)? If not, the operator (or lessee) may be permitted to deduct all reasonable costs for marketing and delivering your gas (including transportation costs).<br />
<br />
Another reason that I ask (and the issue to which a couple of…
Fred:<br />
<br />
I'm sorry that you feel that your question has not been answered.<br />
<br />
Do any of the 'addendum items' speak specifically as to what can or cannot be deducted for marketing, treating, or transporting your gas (including, but not limited to, a 'cost-free' royalty provision)? If not, the operator (or lessee) may be permitted to deduct all reasonable costs for marketing and delivering your gas (including transportation costs).<br />
<br />
Another reason that I ask (and the issue to which a couple of posters have alluded above) is that many operators have gotten away from a 'net proceeds' method of accounting and reporting on gas sales in recent years primarily because of questions about expenses and deductions. Also, many operators now market their gas outside of the traditional 'mouth of the well' or 'at the meterpoint' definitions, opting instead to shop their gas for the highest net price available based on costs of processing, treatment, and transport and the price realized on delivery to a particular market. What you may be seeing are the operator's intent to account for these values.<br />
<br />
Also, many operators have employed more sophisticated oil and gas accounting software that allows for these various costs to be reported more easily on a field-by-field and/or a unit-by-unit basis; thus many owners are now getting to 'see' the deducts as compared to before.<br />
<br />
I would suggest comparing your realized proceeds on production against major commodity indices per mcf (or per mmbtu) as a general guide. Henry Hub is relatively stable IMO, and usually tracks pretty well against the region. Compare it to average long-term trends in the area if you can (try reaching out to a friend or neighbor that has had long-term production with the same operator if you can). If the relationship between the local production and your 'new' production tracks closely to Henry Hub (my example) before and after the accounting change, it may very well be that you are just seeing more of 'what's behind the curtain' than what had been traditionally seen. One particular operator with which I have dealt over the years has generally paid prices within about 5 - 8% of Henry Hub spot, with treatment, processing, and transportation deducts held out, even through a recent accounting system change. Those deducts have held at about 2-3% of the gross value of the gas; the recent accounting change now shows both the gross price sold and transport costs have risen slightly but still pretty much offset each other, yielding a result of within 5 - 8% of HH. (Ergo, accounting change = twice as long statement = same general proceeds = whoopty-do.)<br />
<br />
If the trend varies significantly from the historical norms in the area, you may have to start inquiring into the operator's activities and accounting.<br />
<br />
Finally, it never hurts to be informed. Most operators include contact information in their statements (royalty owner hotline, or similar). GIve your operator a call and find out what's going on. Ask specifically about how they arrive at their figures. I understand this answer but…tag:gohaynesvilleshale.com,2009-07-24:2117179:Comment:7931362009-07-24T01:51:36.204Zfredhttps://gohaynesvilleshale.com/profile/fred68
I understand this answer but it seems in direct opposition to Baron's answer where he quotes me section 4 of a lease.
I understand this answer but it seems in direct opposition to Baron's answer where he quotes me section 4 of a lease. "Quoted from wolf or Caliente…tag:gohaynesvilleshale.com,2009-07-24:2117179:Comment:7931222009-07-24T01:40:53.667ZNAhttps://gohaynesvilleshale.com/profile/Jeremy38
"Quoted from wolf or Caliente now"<br />
Assuming a true standard form (whatever that may be), probably no reference is made to transportation or gathering charges.<br />
In Louisiana, a mineral royalty created by a mineral lease is defined as a no cost interest in production. But, that is arguably no production cost. The legal issue is then whether gathering or transportation costs are a "production cost." It is interesting that you comment that in the past, you were not charged transportation costs, but…
"Quoted from wolf or Caliente now"<br />
Assuming a true standard form (whatever that may be), probably no reference is made to transportation or gathering charges.<br />
In Louisiana, a mineral royalty created by a mineral lease is defined as a no cost interest in production. But, that is arguably no production cost. The legal issue is then whether gathering or transportation costs are a "production cost." It is interesting that you comment that in the past, you were not charged transportation costs, but now you are. Some in the industry take the position that gathering within unit boundaries is a production cost and therefore not deductible from the royalty, but once the gathering lines transport off the unit boundaries towards and to a pipeline (whether intrastate or interstate), those off unit transportation charges are not a production cost and thus legitimately deductible from the royalty owner. Landowners, naturally, take a contrary position. The fact you weren't charged in the past is interesting. It would not do any harm that I can imagine to call the operator and ask why and on what basis this charge is for the first time now being deducted. I am a little confused. Did a…tag:gohaynesvilleshale.com,2009-07-24:2117179:Comment:7930902009-07-24T01:16:35.014Zfredhttps://gohaynesvilleshale.com/profile/fred68
I am a little confused. Did anyone actually answer my question about transportation costs?
I am a little confused. Did anyone actually answer my question about transportation costs? The check stub attaced to the…tag:gohaynesvilleshale.com,2009-07-16:2117179:Comment:7793682009-07-16T19:59:43.414ZThe_Baronhttps://gohaynesvilleshale.com/profile/The_Baron
The check stub attaced to the royalty check should show this. Its a good idea to compare this with the 1099 anyway.
The check stub attaced to the royalty check should show this. Its a good idea to compare this with the 1099 anyway. Kathy:
Be careful; most comp…tag:gohaynesvilleshale.com,2009-07-16:2117179:Comment:7791822009-07-16T18:42:36.283ZDion Warr, CPLhttps://gohaynesvilleshale.com/profile/DionWarr
Kathy:<br />
<br />
Be careful; most companies will net out the deductions automatically when preparing their 1099s (ie. your net royalty proceeds (less deductions) is what is reported as "royalty income". In that situation, if one subtracted "deductions", they would in effect be claiming them twice.
Kathy:<br />
<br />
Be careful; most companies will net out the deductions automatically when preparing their 1099s (ie. your net royalty proceeds (less deductions) is what is reported as "royalty income". In that situation, if one subtracted "deductions", they would in effect be claiming them twice. Fred, to throw a silver linin…tag:gohaynesvilleshale.com,2009-07-16:2117179:Comment:7785702009-07-16T07:44:36.838ZKathy Morganhttps://gohaynesvilleshale.com/profile/KathyMorgan
Fred, to throw a silver lining around the grey clouds. You get to deduct those costs from the taxable income from your royalties. So you don't pay taxes on them at tax time. Make sure you keeps those statements to bring with your 1099 at the end of the year. That's where your tax person will get your deductions.<br />
<br />
Kathy
Fred, to throw a silver lining around the grey clouds. You get to deduct those costs from the taxable income from your royalties. So you don't pay taxes on them at tax time. Make sure you keeps those statements to bring with your 1099 at the end of the year. That's where your tax person will get your deductions.<br />
<br />
Kathy From Bath Form Louisiana Spec…tag:gohaynesvilleshale.com,2009-07-15:2117179:Comment:7778532009-07-15T20:18:15.598ZThe_Baronhttps://gohaynesvilleshale.com/profile/The_Baron
From Bath Form Louisiana Spec. 14-BR1-2A-NL Paid up R4/96<br />
<br />
4. The royalties to be paid by Lessee are: (a) on oil, and other hydrocarbons which are produced at the well in liquid form by ordinary production methods, one-eighth of that produced and saved from said land, same to be delivered at the wells or to the credit of Lessor in the pipe line to which the wells may be connected; Lessor's interest in either case to bear its proportion of any expenses for treating the oil to make it marketable…
From Bath Form Louisiana Spec. 14-BR1-2A-NL Paid up R4/96<br />
<br />
4. The royalties to be paid by Lessee are: (a) on oil, and other hydrocarbons which are produced at the well in liquid form by ordinary production methods, one-eighth of that produced and saved from said land, same to be delivered at the wells or to the credit of Lessor in the pipe line to which the wells may be connected; Lessor's interest in either case to bear its proportion of any expenses for treating the oil to make it marketable as crude; Lessee may from time to time purchase any royalty oil or other liquid hydrocarbons in its possession, paying the market price therefor prevailing for the field where produced on the date of purchase; (b) on gas, including casinghead gas, or other gaseous substance produced from said land and sold or used off the premises or for the extraction of gasoline or other products therefrom, <b>the market value at the well of one-eighth of the gas so sold or used, <u>provided that on gas sold at the wells the royalty shall be one-eighth of the amount realized from such sale</u></b>; such gas, casinghead gas, residue gas, or gas of any other nature or description whatsoever, as may be disposed of for no consideration to Lessee, either through unavoidable waste or leakage, or in order to recover oil or other liquid hydrocarbons, or returned to the ground, shall not be deemed to have been sold or used either on or off the premises within the meaning of this paragraph 4 hereof; (c ) on all other minerals mined and marketed, one-eighth, either in kind or value at the well or mine, at Lessee's election, except that on sulphur the royalty shall be one dollar ($1.00) per long ton. NA=Nasty Attitudetag:gohaynesvilleshale.com,2009-07-15:2117179:Comment:7764142009-07-15T01:29:50.569ZCathaushttps://gohaynesvilleshale.com/profile/Cathaus
NA=Nasty Attitude
NA=Nasty Attitude