I understand that gas companies pay out 2 differant types of payments to their investors and Lessors on the production of a well. The investors in the wells get the return on their investment from the "Hedged" gas price, while the Lessors (royalty owners) get paid on "spot" gas. Right now "hedged" gas is over $6/mcf, while "spot" gas is hovering around $4/mcf. Is this legal?
It's important to remember that leases, and I mean every aspect of every lease, are totally 100% negotiable.
Thus, it is erroneous to assert there exists a single basis for payment to Lessors. Lessors are paid individually, based upon the terms of Lessor's individual lease.
If you're asking whether it is legal for Lessors to be paid on different bases from one another, and on a different basis from other classes of gas company payees . . . . . yes, it certainly is legal. What would be wrong, and possibly actionable, would be for a gas company not to honor terms agreed to . . . whatever they might be.
Yes it's legal. I know that some companies pay their Lessors the "hedged" price, but most just pay the spot price. The reason being because everyone calls in and complains when the price of gas goes up and they are getting less than what the hedged price is. Not so much when they're getting better than spot price... haha...
What makes this site so great? Well, I think it's the fact that, quite frankly, we all have a lot at stake in this thing they call shale. But beyond that, this site is made up of individuals who have worked hard for that little yard we call home. Or, that farm on which blood, sweat and tears have fallen.[ Read More ]