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Permalink Reply by jffree1 on June 25, 2011 at 9:07

You might want to check out this discussion:

http://www.gohaynesvilleshale.com/forum/topics/what-price-are-you-g...

 

Henry is keeping spreadsheets on prices reported by members... with emphasis on Chesapeake, as I recall.

 

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Permalink Reply by Henry on June 25, 2011 at 23:37

I cannot say there is an emphasis on CHK in my survey, beyond the fact that CHK holds more leases than anyone else, so I have more data on them.  I really would like to get more data from other operators.  So if anyone else wants to send me data from other operators, please do so.  I would be most appreciative.  It may also be that more CHK leaseholders participate in my survey, because they are the most disgruntled.

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Permalink Reply by Aubrey C. Sanders, Jr. on June 25, 2011 at 11:35

Hush Puppy,

 

Consider the fact that had you leased at 25% royalty you would be getting the equivalent of approx. 94 cents/thousand. Your joint operating agreement probaly will allow you to take your share of gas "in kind" and you would have to sell it yourself and pay to have facilities installed to take your share. I don't know if your costs are fair or not. With my WI I only pay for comprssion costs and my price for April production was $3.76/thousand.  Additionally I am paid for liquids stripped from gas as it is "wet" gas.

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Permalink Reply by Hush Puppy on June 25, 2011 at 12:59

Thanks -

Actually I acquired a Lease on a small tract and then participated in drilling. CHK never offerred the opportunity to sign a Joint Operating Agreement or Gas Balancing Agreement. Eventually I signed a Marketing Agreement but had no idea that they would be deducting as much as they are withholding. I know that I am obligated to pay fair and reasonable cost to market, transport, etc but $.85/mcf seems to be unreasonably high to me.

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Permalink Reply by Two Dogs, Pirate on June 25, 2011 at 13:05

By participation do you mean that you paid your portion of the costs?

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Permalink Reply by Hush Puppy on June 25, 2011 at 14:33

Yes sir - Received an AFE ($7,000,000 that is now closer to $8,000,000), signed it, sent my money, received Drilling & Completion Reports, Signed a Marketing Letter Agreement, Signed a Division Order, and CHK agreed to pay Royalties to my Lessor.

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Permalink Reply by Henry on June 25, 2011 at 14:20

Hush Puppy,

I cannot answer your question as to whether or not this is a reasonable amount.  What I can tell you is that this is fairly typical for people who have wells with CHK, in cases where the lease/agreement allows deductions.  It seems that CHK'd deductions run higher than those of other companies.  And yes, people are furious.  Unless your agreement prohibits these deductions, I think you are out of luck. 

 

In the Barnett Shale and in the Fayetteville Shale there are class-action suits against CHK for the overcharging of these items.  The suits are Vanoven v. Chesapeake and Coffey v. Chesapeake.  You can search for them on the internet and find the pleadings.  I suspect attorneys are looking to file a similar suit in the Haynesville Shale, but that is a guess. 

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Permalink Reply by Hush Puppy on June 25, 2011 at 14:28

Henry,

Thanks for the heads-up. If CHK is making these kinds of deductions from their Royalty Payments (for the Leases that do not prohibit them), it seems that a good class action lawsuit is appropriate. I have been around this business for many years now and have never encountered this situation before. My problem is that I don't know when we cross the threshold from what is reasonable to what is unreasonable.

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Permalink Reply by JHH on June 25, 2011 at 15:18

I sent certified letters on two occasions requesting specific deductions since i was being paid about $1 less than any other operator.  Other than taxes, there were no deductions.  A third certified letter requested deductions AND sales slips from the well head to CEMI and from CEMI to the open market.  Never got a response.  Then all of a sudden i'm getting a royalty check from another operator for the same three wells... paying market price for NG.  Very grateful chesapeake is gone... but i lost a bunch of money.  Unfortunately they're still lurking around... "Be Careful Out There".

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