Replies to This Discussion

Permalink Reply by Les Bamburg on July 6, 2010 at 3:04

DG, sorry to tell you but those prices are of limited value since they represent the average of daily spot prices. Most natural gas is marketed on a first of the month basis.

Permalink Reply by Les Bamburg on July 5, 2010 at 17:39

Adubu, there is no gas storage at Henry Hub and very little gas is actually transported to the Henry Hub from onshore Louisiana or Texas.

Permalink Reply by adubu on July 6, 2010 at 14:57

Les B thanks I found map of storage thru out USA and interesting of all the locations and different ways gas is stored. I found it by google search

Permalink Reply by Les Bamburg on July 5, 2010 at 15:18

KJ, I can just tell you the NYMEX close for April was $3.842 per MMBtu for comparison. Also the Houston Ship Channel for April was $3.92 per MMBtu. The prices you received may be reasonable when including adjustments for gas transportation costs.

If you identify the wells I could check if there is information identifying the gas sales pipeline involved.

Permalink Reply by Sarah on July 5, 2010 at 20:07

I know this is ot but Les, I continue to be astounded by your knowledge. The breadth of what you know in this field amazes me. Thank you for giving so much of your time and advice here. I sound like a broken record,(thank you thank you thank you) but I'm blown away by how much you know! It's very obvious you a passionate about NG.
(and shutting down coal!...glad you and T. Boone are in ng's corner)

Permalink Reply by king john on July 6, 2010 at 14:38

les, thanks for the comments. i think i received a fair price. my motivation here is to see what the average is across the play. i was hoping there would have been more input from other royalty owners
i think it would be interesting to see a comparison for say, panola, shelby, and san aug. counties all from the same operator. i guess after devon has had a little more time there should be more royalty owners than there currently is.
kj

Permalink Reply by adubu on August 4, 2010 at 0:30

KJ---I've ask Henry if he would start new group for people to list what NG price are receiving on their royalties. He said he would maybe do spread sheet if he could get numbers from everyone. Review thread on how do you verify if operator is paying you correctly in last week or so on main board. if the two of you would do this I think members would supply their NG price received because all you want is price, location of unit, month,-date, and opoerators name

Permalink Reply by king john on August 4, 2010 at 3:18

yes adubu, i am aware of the discussion and i plan on commenting soon. just curious... why are you more inclined to participate on this topic in another thread than you were in this thread?
kj

Permalink Reply by adubu on August 4, 2010 at 3:39

kj---indifferent which thread it is discussed on--don't care your thread is just find with me--I think we all would like to see and compare the data, I am just tried of these companies & operator screwing all the small royalty owners.

Permalink Reply by Love Horizontals on June 4, 2013 at 8:06

Issue to consider when comparing prices in different areas is who the buyer is and what the terms are/  Most gas is sold under contract and the spot price is only used to adjust the contract price up or down.  Wellhead price is the NET of marketing and transportation price.  For Leases that prohibit charges for marketing and transportation, these costs need to be added back.

Also keep in mind that the Seller & Buyer can structure contract anyway they choose and the only way for any royalty owner to know if he is being paid correctly per the terms of his lease is to review the contract.   Here is an example:   

S sells to B for $4.80 with S incurring Marketer & Transportation Costs of $.80 so S Nets $4.00.   Alternatively S can Sell to B for $4.00 with B paying the Marketer & Transportation of $.80, so B still ends up paying $4.80 total and S still nets $4.00.   However if Lease does not allow for deductions for Marketer & Transportation, in the second scenario, chances are company is only paying royalty on the $4.00 and NOT adding back the $.80 reduction in price for these costs being paid by Buyer.

There are many possible combinations and scenarios that can occur as to how the sale is structured.

Another way royalty could be understated is when Buyers want longterm contract from Seller say for $6.00 fixed, net of all costs. Royalty owners are often paid on the market price and not the actual contract price or price received by the company .  The longterm contracts are typically structured with other side contracts. Take a look at Devon or other companies financial reports.  What is often the case, the company's proceeds of sale are often significantly higher.......like when spot is $3.50, the net impact of their multiple contract structure regarding the gas produced is $5.50.  Royalty owner is paid on the lower number.

Permalink Reply by GoshDarn on June 4, 2013 at 19:16

LH:

Thanks for posting the info lesson.

Much appreciated.

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