Does anyone have a Idea.Just got my first check they took almost 50%.
CAROL THANKS FOR THE ANSWER
I should have included that information in my first comment since the unit size, number of wells, and amount of land owned, among other factors, all affect the amount of royalties received. I am glad I signed with no deductions - the checks have varied so much that I can't even imagine deductions being taken out of them. I know most, if not all, of the other people in the unit have 12.5% royalties and deductions - I signed for 16%, no deductions.
The deductions are a fixed cost per 1000 cubic foot of gas produced, typically 50 cents to $1.00. Since gas is very low now, selling under $1 at some places in the country, that represents 50% or more of the total gross money gas companies receives. If gas was selling at $10, the total deductions would be 5% to 10% of the gross. Since gas has been rising recently, your percentage deductions will go down. Good luck.
HAS THE ORIGINAL QUESTION THAT PHILIP ANGELO ASKED, BEEN ANSWERED? I TO RECEIVED A ROYALTY STATEMENT WITH - A CODE- UA - LINE VARIATION SHOWN AS A DEDUCTION - I HAVE THE BELOW INFORMATION, BUT I'M NOT SURE IF IT APPLIES ? -- OR IT'S JUST A PIECE OF THE PUZZLE .. Paid royalties for all gas produced from a landowner's lease is based on the Unit Value of the Natural Gas. After metering the gas the royalty rate is adjusted and based on the BTU content of the gas. The BTU content, which refers to British Thermal Unit, is a measure of the heat content of the gas. For a variance in the BTU content either above or below the standard of 1,000 BTU's per cubic foot. the energy company increases or decreases landowners royalty payments proportionately, based on the gas rate paid.
Still don't get it. why all the smoke and mirrors
Phillip it only appears to be "smoke and mirrors because you are unfamiliar with all of the terms of your lease (what the lessee is contractually allowed to deduct from your royalty proceeds. Only you can answer what John has asked. Have your question(s) been answered?
So the basicly you are getting paid for btu's not mmcf of gas pumped out of the well? they make the adjustment
Again Phillip, it would depend upon what your lease states, but 99.999% of the time, yes... you get paid for MMbtu's not MMcf's. This generally operates in your favor since more often than not the Btu's exceed 1,000. Which would mean you get an upward adjustment, not a downward adjustment. Chances are you are getting hit with deductions for gathering, compression, dehydration, etc which are all post production expenses... the legitimacy of these deductions will be dictated by your lease terms. As somebody else has stated, the vast majority of these costs are on a MMbtu or MMcf basis and as natural gas prices increase the percentage that these represent will decline.
Philip, you are very welcome. I likely didn't provide you with the answer you wanted to hear but hopefully it provided you with insights into how you are being paid and what your statement means.
Best of luck
UNFORTUNATELY THERE ARE A NUMBER OF OTHER FACTORS THAT ENTER INTO THIS EQUATION - CHESAPEAKE USES UA - LINE VARIANCE -
STATOIL - USES LEASE GROSS DEDUCTION - BOTH DEDUCT AMOUNTS FROM THE LEASE GROSS VOLUME AT WELLHEAD - THIS APPEARS TO ENABLE THEM TO PUT IN AMOUNTS THAT THEY ALONE CAN CLAIM WITHOUT VERIFICATION - THE LANDOWNER HAS NO METRICS TO EVALUATE THESE FIGURES.
DEPENDING ON YOUR LEASE YOU MAY BE ABLE TO REFUTE THEIR FIGURES.
MY LEASE (A FRIENDSVILLE LEASE) STATES -
"Royalty", "Royalty Interest", "Lessor's Royalty" or "Royalty Share," wherever used herein, shall mean twenty percent (20%) of one hundred percent (100%) of the Sales Price of all Oil and Gas produced, saved or sold from a Well on the Leased Premises or a Unit in which a portion of the Leased Premises is located. The Sales Price for the Oil and Gas shall be determined at the Wellhead, adjusted for BTU content, without deductions for, gathering, separation, transportation, marketing, compression, dehydration, line loss, Production Taxes of whatever type and kind, compression fuel, pumping costs or other costs of the Lessee, of whatever type or kind, associated with the production of the Oil and Gas. The volume and/or heating value of the Oil and Gas produced from a Well or the Leased Premises or a Unit in which a portion of the Leased Premises is located shall be measured before the Oil and Gas leaves the Leased Premises and/or Unit.
SO I AM IN A POSITION TO QUESTION THE VALUES OF THEIR DEDUCTIONS.
BUT IT APPEARS THAT THE METERED BTU AT WELLHEAD, NOT THE VOLUME FLOW, IS THE
DEFINING FIGURE ON "WITCH" TO QUALIFY AND QUANTIFY THE DEDUCTIONS THE ENERGY COMPANIES ARE CREATING TO ENHANCE THEIR PROFIT MARGIN.
JOHN I GUESS YOU JUST HAVE TO TRUST THEM ! HAVE THEY EVER OFFERED TO LET YOU LOOK AT THE METER THAT THEY ARE GETTING THE READINGS FROM?