Royalty amount decline!

My latest royalty check showed a drop of $45,000 from last month. I'm only 9 months into receiving royalties. That's a scary decrease.

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Permalink Reply by Zack Jameson on August 1, 2014 at 11:46am

I've never checked into it. You probably know what that entails. I figure it's all due to the price of gas decreasing, plus less production.

Permalink Reply by adam sorell on August 13, 2014 at 12:07pm

What company was it?? Chesapeake??

Permalink Reply by RB on August 2, 2014 at 4:18am

I would think the oil/gas firms should have expected the increase in supply with new fracking technology.  Pretty basic. If they wait, there is no bonus for them, stockholders, stakeholders. I would hope they move forward despite price down/supply up.  With that scenario they are supposedly exporting as additional sales outlet.

Permalink Reply by Richard Nicholls on July 17, 2014 at 3:32pm

I had been receiving royalties from three companies.  Two months ago I did not receive anything from one of them.  I was told that my account had a credit balance!  Many e-mails and telephone calls later I fund that one company sold their interest in the well to another company but the sale had to be made effective the date well went into production.  Hence the credit balance from the first company and I am now waiting for the second company to repay the royalty from the first company.  Amazing.  No one ever advised me of the sale and its consequences.

Permalink Reply by Cathy J Zimmerman on July 18, 2014 at 3:59am

Its interesting that they can do all these deals and never tell the landowners what is going on.  If I did that in my job there would be major trouble.

Permalink Reply by Richard Nicholls on July 18, 2014 at 9:38am

Cathy, you have no idea how devious these people are.  Even after over12 months of dealing with them there are some things I still can not get a clear answer for.  Like the man said, "it's easy to tell when gas people are being evasive, their lips move."  Goodluck and keep checking on them.

Permalink Reply by Cathy J Zimmerman on August 13, 2014 at 8:31am

I like that line about their lips move!  You have at least tickled me into a laugh and so I'm not crying!  Very disappointed but also feel blest.  I hope somehow the landowners come out better than this looks right now!

Permalink Reply by CNT on July 18, 2014 at 12:27pm
The company does not have to tell you it sold its interest unless you have it in your lease that you, the lessor, wants the lessee to write you a certified letter telling you about the sale. You can even stipulate within what time frame you want to be notified--- 30 days, 60 days. Check with your attorney.
Permalink Reply by Jeffrey Beunier on August 3, 2014 at 2:31pm

As Dexter points out, decline rates in the Marcellus and Utica can range up to 80% or more in Year one, the production rate/decline starts to flatten out and the decline rate decreases over time - Google "Hyperbolic decline rate" to see some examples, or pull up the presentation for companies like Cabot, Carrizo, PDC, Athelon, or Rice and they will have example production curves in their presentations.  There may be hope depending on the drilling density of the unit your acreage is included in, if they haven't down spaced, someday in he future they may and you will get the benefit of that flush production once again.

Permalink Reply by Zack Jameson on August 4, 2014 at 3:17am

I was going over some figures and I determined that I'm getting less then $55.00 per acre PER WELL per month. Think about that! For one well, per acre and it's that low! Thank goodness it's a large unit with 11 wells. If there were only 3 or 4 that would really be a joke. Folks, someone is getting rich off of all this and it sure isn't the landowner.

Permalink Reply by Dave Smith on August 5, 2014 at 5:07am

My relatives are in the early stages of signing a lease in Tyler County.  The signing bonus was 3k, then 1.5k, now 3.5k.  I will let you all know the outcome. 

Permalink Reply by Dave Smith on August 13, 2014 at 7:38am

I need to speak with an atty fairly soon before the lease is signed.  Trying to communicate with Nuttall.  Need another atty's contact info soon.  Thx for the assistance.

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