Replies to This Discussion

Permalink Reply by FairMktValue on December 31, 2013 at 3:18am

Phil.... exactly...

The unknown is exactly what are these deductions and how are they calculated?  Can they be challenged and thereby reduced?

Permalink Reply by RB on December 31, 2013 at 3:15am

Good luck FMV. How many acres have you?

Permalink Reply by LewPa on December 31, 2013 at 7:36am

Hi All

I signed a lease with Phillips Exploration in Feb 2008. Thought I was signing a shallow well lease, John Maloy the land man even talked about me getting x amount of free gas, this is before anyone heard the word Marcellus. Six months later I pretty much came to the conclusion I'd been snookered or can you say theft by deception!! XTO bought out Phillips and continued paying the $10.00 per acre delay rental thru the years. In Nov 2012 I received a letter from Rex stating they acquired my lease. Later in the month 3/4 of my acreage was put into the Stebbins unit, the well had been drilled previously in the early fall,but had not been completed. Well was fracked and pipeline put in thru the summer. I spent all summer trying to get out of the lease since it expired in Feb, useing Wil White to no avail, but he did get the 1/4 of my acerage that wasn't in the unit released. Stebbins unit goes into production in mid Sept. (continued below) 

Permalink Reply by RB on December 31, 2013 at 7:41am

don't see cont'd part just yet

Permalink Reply by LewPa on December 31, 2013 at 8:12am

My royalty is 12 1/2% and reads exactly as Phil's legacy example above. The unit is 473 acres. Oct fees taken out comes to 23%, whatever happened to the state minimum of 12 1/2%!! They sell three different products, Gas R1- Demand Fee, Firm Transportation, Gathering Fee, and Marketing Fee. PPRO R1- Fracktionation Fee (yes it is a real word). Another PPRO R1- Fracktionation Fee, Processing Fee. The gathering fee is the big one and all of them seem to fluctuate with the different volumes and pricing of the products. Talk about vague, they could pretty much make up anything and how are you going to know! My basis to what I actually get works out to $73.00 per acre net, $95.00 per acre gross per my royalty of 12 1/2% on the Stebbins short lateral of only 2825 feet in the Burkett shale. RB, you don't hear much about Rex because a lot of the older lease holders are older farmers that don't have computers! As far as your landman talking 2%, you better clarify that, although if you"ve already signed the lease it's too late. As I've heard many times from Rex, don't take it personal, it's only business.  LewPa

Permalink Reply by LewPa on December 31, 2013 at 8:26am

Another tidbit, on the 1/4 of my acerage that Rex lost, they just recently contacted me about doing a new lease and putting it in a new unit that is going to be right next to the Stebbins unit (EAST)  The angle now since they are supposed to drill and complete it next year, is to do 1 year delay rental type bonus lease. If it didn't get finished before the lease expired they would have to pay again for another year. Am trying for the no deductions royalty for the obvious reasons stated above and for my mental health!! LewPa

Permalink Reply by LewPa on December 31, 2013 at 8:47am

Phil, How did you manage to get your royalty changed when Phillips sold out to XTO? Food for thought, the gathering fee is the big deduction as stated above, which i presume is for the pipeline installation, would I be paying for the extension from McElhinny's or for the whole pipeline to the plant since coming online? Do only the land owners pay for the pipeline or does Rex pay some too? Ifso, who sets the %s? Seem nuts to be paying for something when you had no control over the costs of it to begin with, even if they were all legit. How does anyone ever get a handle on the real costs of any of the deductions? LewPa

Permalink Reply by RB on December 31, 2013 at 9:49am

where is the Stebbins unit located/

Permalink Reply by Philip Thackray on December 31, 2013 at 10:04am

The pad is on the Gumto Greenhouse property on Meridian Road.

Permalink Reply by RB on December 31, 2013 at 9:44am

Lew,

Thanks for sharing.  That is interesting. Tell me, while they vary, is the % the same for each type?

Supposedly, we should be able to audit, check the figures on check to production.  Have you tried that?  How long have you been receiving royalties?

We will work to get it sorted out, eh?

RB

Permalink Reply by Philip Thackray on December 31, 2013 at 10:10am

RB

I hold little hope for "sorting this out" anytime soon or ever.  Most of those deductions are set by Mark West not Rex.  Mark West paid a half a billion dollars to Rex for that stuff and they will defend their position fiercely.

As I said below, I’ll will soon be in the same stew.

Phil

Permalink Reply by RB on December 31, 2013 at 10:21am

Not up on Mark West.  A middle man in sales and distribution? Great.

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