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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Permalink Reply by Les Bamburg on August 17, 2010 at 5:55
JD, yes - I had looked at examples from several operators and that is the reason I believe the price comparisons are apples and oranges sometimes. The only way to get apples and apples is to obtain additional information.

Deductions made by transporter/purchaser are not shown so lessor would need to request additional information from Chesapeake (ie gross sales price and deductions for compression, treating, transportation, etc).
Permalink Reply by JD on August 17, 2010 at 6:52
Also, of course, you should ask "WHO" the gas was sold to and "WHO" the deduction amounts were paid to. Who knows, there might more "affiliates" in the mix.
Permalink Reply by w.r. frank on August 17, 2010 at 3:51
Henry and Les B.,

Now I am confused. I thought Henry was using the "Gross Royalty" from each check stub so we had apples to apples. Then, if a Lessor had a "no cost" royalty, the only deduct would be La. Severance tax (which should be refunded once the the well reaches payout or two years in production and the operator applies for refund). If a Landowners lease agreement provides for deducts then there would be further deductions.

As long as Henry's data is Gross Royalty before any deducts, then we should be comparing apples to apples. Then, you can compare the Gross with NYMEX final settlement price (3 to five days before last day of the month) to see how your operator is performing. I agree with Les, it should be at least 93% to 96% of this NYMEX price.

Henry, isn't this how you did it?
Permalink Reply by JD on August 17, 2010 at 4:21
The example on the CHX website shows production for the month on 0408. This was of course when gas prices were much higher. The first well shows $7.372 as the price for gas. The second shows $10.272. (It is kind of odd the price difference between the two.) The big problem is the fact that they do not disclose what was deducted to arrive at the two prices. I suspect the prices Mike Hudson posted were from this column.
Permalink Reply by Les Bamburg on August 17, 2010 at 5:42
WR, my concern would be that Chesapeake is making certain deductions in calculating the price so those would be incorporated in the gross value whereas other operators may show the deducts separately. Hence my statement about asking Chesapeake for additional explanation and/or information regarding their price calculation.
Permalink Reply by Henry on August 17, 2010 at 6:01
Les,
You may be right, and it may be a matter of Chesapeake making deductions from the gross price, and putting some type of net price on the statement. If that is the case, then this doesn't explain why Landowner 18 (who had cost free royalties) received the same price as his neighbor (who signed the Chesapeake standard lease).

It would be nice if a Chesapeake rep on this site would give a simple explanation for this!
Permalink Reply by adubu on August 17, 2010 at 6:30
are there CHK rep on this site?
Permalink Reply by Two Dogs, Pirate on August 17, 2010 at 6:35
There use to be a CHK landman on here but I haven't seen him on in a long while. You can bet they are monitoring the site.
Permalink Reply by Henry on August 17, 2010 at 6:06
To those people who provided data from operators other than Chesapeake -- Can you provide me the amount of deductions from Mar/Apr/May 2010 that were not due to taxes? I'll subtract that out, and see if I can make your numbers match the Chesapeake numbers. Thanks.
Permalink Reply by adubu on August 17, 2010 at 6:48
GD---In Texas We call this "Whore House Accounting" or "Government accounting" :) LOL
Permalink Reply by Les Bamburg on August 17, 2010 at 7:45
GD, unfortunately most terms (price, gross value, deductions, etc) are not well defined and vary by operator. I have been reading about royalty valuations and you would not believe how much variation exists between the states. I seems operators would be better served to replace the antiquated language in lease agreements with terms better suited to today's natural gas market.
Permalink Reply by w.r. frank on August 17, 2010 at 7:14
That is exactly what I said. The rebate occurs (1) when the well pays out and the operator applies for a refund or (2) two years on production and the operator files for a refund. The rebate period ceases at the first to occur of (1) payout or (2) two years.

I have heard that the state is very slow to process the rebate.THEY HAVE YOUR CASH!

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