Replies to This Discussion

Permalink Reply by Sam on January 1, 2011 at 14:21

I contacted Chk about the low prices. After checking, they "discovered" a mistake.  They were taking out fees (that didn't even show on the check stub) that were not in our lease.  Then, they reimbursed back only 5 mo. Upon questioning, they checked again & went back to refund the whole time we'd had a well (another 12 mo.).  Now, we have no idea if they even did the figuring correctly or not..no way to know since nothing even showed on the stub. How in the world can well owners know if they are getting the right price.  It seems there is much manipulation of figures which should be looked at by the state of LA.  I wrote them and they didn't answer. Guess they figure we should be grateful for whatever we get! We are, but want honesty in the deal too. SAM

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Permalink Reply by JHH on January 2, 2011 at 1:59

In Texas, Section 91.504 of the Natural Resources Code requires producers to itemize deductions.  But, the mineral owner must request this in writing and it must be sent certified mail.  Otherwise you won't get squat as far as an explanation.  I requested this in 2010 because it appeared "unnamed company" was "netting out" expenses from the price of gas being sold on the market. Meaning,  if gas was selling for $4/thousand cubic feet... and the company's expenses were $1 per thousand cubic feet for transportation or whatever... the royalty owner would be paid at $3.  As i understand the law, companies can't reduce the price of gas by netting out expenses.  They would be required to pay royalty owners the $4 and show deductions/expenses (if required and allowed by lease) on your pay stub.  

After my request... the price they paid... again appeared to reflect the cost of gas at the time of production.  but after looking at the October 2010 statement... we're getting less than a dollar per thousand cubic feet than any other producers adjacent to our wells.  There are no deductions on the payment stub.  I'm not a lawyer... i only understand a tenth of oil/gas law.  It's all very disheartening especially if you're a royalty owner and a stockholder.  it would be nice to see a "friendly" investigation from state regulators in Texas and Louisiana.  But we all know the laws are written to favor the industry.  Which in an odd way is OK.  Producers risk a lot of money to get needed energy supplies.  But when landowners sign leases, it's for a lifetime and we'd like to be treated fairly.

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Permalink Reply by Ben Elmore on January 2, 2011 at 3:27

Unfortunately some oil companies choose to abuse their power over the royalty owner, and believe it or not their annual budget accounts for royalty litigation. The Texas statutes you mention, as well as the La statutes, allow a royalty owner to file suit if they do not get an adequate response to their inquiry. You can recover interest on the underpayment, attorney's fees and court costs. Having said that, the companies who are taking advantage are betting that the royalty owner will not want to go through the stress and frustration of a lawsuit. That is especially true if the underpayment is small. It is part of the business. The legislature has done some good by enacting the royalty reporting statutes, but are not charged with enforcing the laws they create. The Railroad Commission and Department of Natural Resources are likewise not charged with enforcing the Statutes. Writing to them will fall on deaf ears. The enforcement of these statutes is left up to you and the court system. That is why the legislature did provide you the ability to recoup your costs and attorneys fees if you win. Not a perfect system by any means, and the companies know that.

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Permalink Reply by JHH on January 2, 2011 at 3:50

Correct on all counts.  Plus they have more lawyers and more money.  Seems a good route might be through honest members on their board of directors.  thanks

 

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Permalink Reply by Henry on January 2, 2011 at 3:54

JHH,

This "unnamed company" advertises on its web site about how you may contact their board.  Give it a go...

 

Chesapeake Energy Corporation Board of Directors
c/o Jennifer M. Grigsby, Corporate Secretary
P.O. Box 18496
Oklahoma City, OK 73154

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Permalink Reply by Ben Elmore on January 2, 2011 at 4:13

If you can get a large group to write a joint letter (or multiple letters) to the board you might have a better chance of them paying attention. But maybe I'm just jaded with my experience with this particular company.

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Permalink Reply by Linda Whatley on January 2, 2011 at 6:07

Sounds like a great idea..........  Henry, what do you think?

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Permalink Reply by Henry on January 2, 2011 at 6:34

I have no lease with those guys.  It's you leaseholders who should start writing.

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Permalink Reply by Henry on January 2, 2011 at 9:21

And better yet,

Contact or write your local representative to the state legislature.  Ask him/her to propose a transparency in reporting law.  Require any operator who takes oil or gas out of Louisiana lands to provide the gross price, and an itemized listing of each deduction, leading to the net price, on each monthly statement.  If enough people in NW Louisiana leaned on their legislators, this could happen.  How could anybody be against transparency?

 

So Linda, let's draft a letter on that, and let everyone send it to their representative.  OK?

Permalink Reply by sesport on January 2, 2011 at 9:29

Good idea, Henry.  I think we saw the similar, and good, results when addressing the water issues. 

 

80)

Permalink Reply by sesport on January 2, 2011 at 9:20

thank you, Ben  80)

 

I'd like to add to that ... a well worded letter, sent "return receipt."

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Permalink Reply by JHH on January 2, 2011 at 4:19

Great idea.  Thanks!

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