What Price Are You Getting for Gas? Last Update: March 25, 2011

Hello Everyone,

 

Here are the latest numbers.  If anyone else wishes to participate and provide data for my survey, please follow the instructions below.  I welcome all data.

I am now asking each respondent to provide me the following:

Section/Township/Range -- everyone (if you are in Texas, tell me your county, and the survey)

If you get your check from Chesapeake, please tell me:
Price received (before severence tax)
Does your lease entitle you to cost-free royalties?

If you get your check from one of the others,  please tell me:
Company you leased to
Company who is operating the well
Gross price
Please tell me each deduction, and the amount.
Net amount (before severence tax).  [I know, gross minus deductions ought to equal net, but I just want to make sure.]
Does your lease entitle you to cost-free royalties?

If you are WI or UMO:
Company operating the well
Gross price
Please tell me each deduction, and the amount.
Net amount (before severence tax).  [I know, gross minus deductions ought to equal net, but I just want to make sure.]

Please send me the information via GHS email.  This discussion is getting too large, and sometimes a post gets lost if I don't check in for 24 hours.  All info will be kept confidential. I will continue to post back what I learn periodically. Thanks in advance.

Tags: Are, Gas?, Getting, Price, What, You, for, payments, royalty

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Les,
Thanks. I have asked all of my Chesapeake mineral owners to go back and ask how their price is determined. Your questions can serve to guide them. However, to date, no one has received a response. I don't receive royalties, so I have no basis on which to contact Chesapeake myself.
RR--the deductions off gross give you the net they pay the royalty owner so it off sets and the 1099 you receive total should be net only for reporting the income for tax calculations minus state severance tax that is itemized. However saying that I keep all your pay stubs for the year to match with the 1099. Keep and give all to your account to prepare your Tax return
adubu, Thanks for the info. Sorry I baled out on the discussion early. Spent the day car shopping with the wife. After reading all this I'm not so upset about not getting a cost free deal.....doesn't sound like the ones that did are really benefitting from it anyway!
I'll be posting an update to my numbers this weekend. The trend continues of low prices being paid by Chesapeake. I have yet to see a single Chesapeake well pay a price as high as the other guys.

So let's talk about the obligation of the lessee. According to RS 31:122, the lessee "is bound to perform the contract in good faith and to develop and operate the property leased as a reasonably prudent operator for the mutual benefit of himself and his lessor."

Does anyone think selling cheaply to your affiliate, and pocketing the difference later on, is consistent with 31:122? I don't see good faith in doing that. It is not done for "mutual benefit" either.
I have updated the data. You will find it at the top of the page, in the latest attachement. Note: I had to go to two pages in this file. To summarize:

I have 30 reports (17 non-Chesapeake, 13 Chesapeake). Chesapeake continues to disappoint the mineral owners. I can tell you that in the private correspondence I receive, there are some very irate mineral owners. Several have tried contacting Chesapeake, but have yet to receive any response.
hello. Henry,it is obvious that the drillers play fast and loose with the figures they pay. You failed to post that number 16 on your list was Encana.Those figures are based on wellhead price-no other costs..encana presold this well for 2 years at$ 6.25,but they dont payout at that figure,of course.The henry hub louisiana price on 6-10 was $4.68. We have sent letter to Encana on several subjects and will probably receive an answer eventually. If anyone else here was paid for that well, please respond.sec. 19-14n-14w..
lars bly---no operator pays the lessor their hedged price received on the oil & gas. The lessor in not at risk for the hedge price if the price goes up, etc it balances out at market rates each month.
Hi All,
Here's a chance to ask Chesapeake why their royalty owners are getting lower prices than those landowners with other operators....

The Shreve Memorial Library System, Bossier Prish libraries and Chesapeake Energy will present a natural gas educational series addressing the fundamentals of natural gas production, uses , supply and demand and the role of the HS, a news release states.

All meetings start at 6pm
Caddo libraries:
Today: Cedar Grove-Line Ave Branch, 8303 Line Ave, spt
Thursday: Hamilton/South Caddo Brach, 2111 Bert Kouns Indus Loop, Spt
Sept 21: West Spt Branch , 4380 Pines Rd, Spt
Sept 27: N. Caddo Branch, 615 N. Pine St, Vivian
Sept 28: Broadmoor Branch, 1212 Capt. Shreve Dr., Spt
Oct 4: higginbotham-Bryson, 9359 Greenwood Rd, Greenwood

Bossier Libraries:
Sept 13: Benton Branch, 115 Courthouse Dr, Benton
Sept 23: Aulds Branch 3950 Wayne Ave, B.C.
Oct 14: East 80 Branch, 1050 Bellevue Road, Haughton
Oct 25: Bossier Central, 2206 Beckett st. B.C.
All, You might ask them why they have very limited information on their royalty check stubs. They disclose a "net" number for the price of gas and represent it as a "gross" number. But if you think about it, a company that markets, compresses, transports etc. etc. etc.... under the same Corporate veil, net and gross could be defined as one and the same.
Hi guys - there have been a lot of questions in regards to Chesapeake's royalty deductions, and I wanted to give you guys some information that I think will be helpful for you.

Who buys the produced natural gas from Chesapeake, an affiliate company or non-affiliate company?
Our gas is purchased by Chesapeake Energy Marketing, Inc. (“CEMI”), an affiliate of Chesapeake Energy Corporation.

What is considered to be the point of purchase of natural gas?
Chesapeake sells gas to CEMI at the wellhead. The wellhead is an above-ground structure placed on top of a producing natural gas well.

How is the gas purchase price determined? Is it tied to a particular index such as Henry Hub pricing?
CEMI pays Chesapeake the weighted average re-sale price less any costs (fuel, gathering, transportation) incurred by CEMI in transporting the gas from the wellhead to the points of re-sale. Additionally, gas sales are not conducted in simple, universal contracts. Unlike most oil purchasing agreements, gas contracts are more individual to a well or lease connection based on field conditions.

What deductions are applied to the gas purchase price?
Every lease is an individual contract, therefore every lease produces differing royalty payment language and differing accounting methods between gas producers and payors. Chesapeake as lessee does not make any deductions from the proceeds received from CEMI. Depending on each royalty owner’s lease, deductions made by CEMI may be added back to the proceeds received by Chesapeake prior to calculating the basis for royalty payments if the lease does not allow for post production costs. Each lease is an individual contact between the lessee (operating company) and the lessor (royalty owner).

Because leases vary based on the individual, Chesapeake has established an Owner’s Relations Service Center. any Chesapeake lessors can call our Service Center at 1-877-CHK-1GAS and speak directly to a Chesapeake employee who can help review their lease or answer any questions. If you have any other questions, please don't hesitate to send me a message! I hope this was helpful!
How about:

Why does CHK routinly pay far below other operators, even within the same field?
Good question...same as what I have. AND why do they tell me they take fees out when we are not a part of the cost according to our lease. My ques is how legal is it and what to do? S

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