Replies to This Discussion

Permalink Reply by grasshopper on September 10, 2010 at 7:49

Henry:

Well # 240294, Section 9, 9N, 12W. Drilled by ENCANA, SWEPI now the operator, Leased to Chesapeake.

April: 145195.55 MCF (SONRIS says 160290 MCF); $3.64 / MCF gross; $3.30 net.

May: 467304.66 MCF (SONRIS says 478631 MCF); $3.59 / MCF gross; $3.26 net.

Thanks for doing this.

grasshopper

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Permalink Reply by Henry on September 10, 2010 at 7:52

Grasshopper -
thanks. Two questions.
1. Did your lease call for cost-free royalties?
2. What was the deduction that was called out to take you from gross to net? Was it severance tax, or something else?

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Permalink Reply by The_Baron on September 10, 2010 at 8:19

Might want to ask if the price was adjusted for btu's...

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Permalink Reply by grasshopper on September 10, 2010 at 9:47

The royalties are cost-free (I think).
The deducts were listed under " TAX ", which was under " LEASE " on the page. Nothing was shown in the " DEDUCT " column under " LEASE ". There was a 31% deduct under " OWNER " that we were told was withholding tax. That's all I know.

grasshopper

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Permalink Reply by JD on September 10, 2010 at 15:04

Grasshopper,

Thru June 30, 2010 the La severance tax was $.331 per MCF. Check your May numbers. $3.59 - $3.26 = $.33. Your operator will probably submit qualifying well costs to the State of LA to recover a portion of the severence tax paid. They should credit back your share to you on a future royalty check.

For Henry's analysis, $3.64 for April and $3.59 for May are probably the appropriate numbers to use with Swepi or Encana listed as the operator.

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Permalink Reply by Pam on September 13, 2010 at 15:18

Hey Grasshopper!

Henry, thanks for all the effort you are putting into this. It'll be interesting to see how this plays out over the next few months.

I have unleased property in the unit that contains this well #240294 and am receiving cost reports from Encana. They are showing:

April: 191649 MCF @ $3.78

May: 478584 MCF @ $4.05

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Permalink Reply by Katie McCullin on September 10, 2010 at 9:18

Hi guys - thanks for the kind words. I'm happy to help and appreciate any feedback. Each lease is an individual contract, so it's hard for me to give specific answers without knowing the details of each agreement. I would encourage you if you are a Chesapeake lessor, to contact our Royalty Owner Contact Center (1-877-CHK-1GAS). Here, a Chesapeake employee can look up your specific lease and address any concerns directly. You can also gain information from our Owner Relations website (http://www.chk.com/Owners/Pages/Default.aspx). If you reach out to the Contact Center, have your Royalty Owner number handy, as this will help move things along.

Thanks!
Katie

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Permalink Reply by The_Baron on September 10, 2010 at 9:42

Thanks Katie...

But I like many others have done that.

CHK fails to provide any adequate answers, just the same information rehashed over and over...

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Permalink Reply by LP on September 10, 2010 at 10:03

Baron,
Before I posted my question to Katie I had sent an email to Tami Hunter, Owner Relations at Chesapeake and asked the same question. Naturally, I provided the information they would need to review my particular lease. I have been in contact with Tami in the past with other questions and have always received a reply with clear, detailed and satisfactory answers to my questions. And if I needed further explanation, they would reply to that as well.
I want you all to know that I received a telephone call from Katie today. They had received my inquiry and answered my question. My individual question necessitated an individual response but I do want you all to know that the question was answer and resolved.
If you give them the information they need, rather than grumpy complaints, I have every confidence, based on several inquiries to Chesapeake, that they will make an effort to resolve your issue.
Thank you again, Katie.
LP

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Permalink Reply by The_Baron on September 13, 2010 at 7:46

LP,

First of all, I primaryly deal with CHK as a WI.

My problems are not to do with a misunderstanding or simple typo. i too have called CHK on multiple occasions. Many times it takes two to three months to get a satiffactory response. More so it has to do with CHK's buisness practices all together.

My problems:
1) CHK appears to be selling gas to its wholly owned subsidiary at a discount. It will be interesting to see how Henry's work pans out. So far his very preliminay data shows CHK is at the extreme low end of $$/mcf
2) Work is preformed by whollly owned subsidiarys at inflated prices, furthermore, these subsidiaries rent equipment such as drill pipe to CHK at what appears to be a little on the pricy side. I find it almost comical that one subsidiary will rent wquipment to another subsidiary. While I would understand some off this as efforts to limit liability of the CHK parent co. I believe the bulk of this is to overcharge the WI owners.

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Permalink Reply by Katie McCullin on September 10, 2010 at 10:50

Baron:

Because every lease represents an individual contract between and mineral owner and an operator, the information provided is on a general basis. There are many factors that impact the amount of net royalty payment. In a time of low gas prices that all of us have experienced over the last few months, it is common for lessors to be concerned about the price of gas at the wellhead and the many other post-production costs incurred to deliver product to the final sale point. The American Royalty Council is a great source of information that lists current prices of gas and other factors that enter into post-production costs (http://www.americanroyaltycouncil.com/). Of course we always invite our Chesapeake royalty owners to direct specific questions concerning their individual lease and/or royalty payment to our Owner Relations Center at 1-877-CHK-1GAS.

Thanks and let me know if I can do anything else!
Katie

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Permalink Reply by grasshopper on September 10, 2010 at 15:33

Katie:

The Natural Gas Weekly Update reported that the average wellhead price for April was $3.92/Mcf, and for May it was $4.04/Mcf.
Chesapeake paid me $3.64/Mcf for April and $3.59/Mcf for May. (Gross befor taxes. )
This was 92.86% and 88.86% of the national average.
It sure would be nice to know the average price that Chesapeake's wholly owned subsidiary receaved for their gas sold in April and May.

Thanks for your interest in this site,

grasshopper

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