How much are deductions draining your royalty check?

We seem to hear alot about Chesapeke siphoning off alot of deductions from royalty checks. How are the other gascos treating their landowners? Shell , Range , Hilcorp , Chevron , etc. , etc.?

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Permalink Reply by RB on August 31, 2016 at 12:10pm
There is an older law which states the 12.5%. When i signed with a royalty (17%) I figured well if they take deductions they can't take anymore than law allows. If these leases have legalese that circumvent that law, then it is crooked. This law is an old law. I don't get how it's possible to override the law no matter how they write the contract
Permalink Reply by RB on August 31, 2016 at 1:59pm

Ha!  I thought I was protected by the Pennsylvania’s Guaranteed Minimum Royalty Act (Act 60 of 1979).  It guaranteed a minimum of 1/8th percent.  So logically  I thought the higher royalty (17%) was incentive to sign with them.  Didn't like the the potential processing deductions which was undefined. That didn't feel comfortable signing but 1) thought I was protected by the law on the minimum and 2) the attorney never said anything about it superseding  the law.  As a stakeholder, I should feel they have my best interests in mind, right?  Furthermore,  the rep that signed us said do you hear of anyone complaining about the firm like they are others. So now, after reading about the new bill proposed I am left to believe that I was swindled, and that offering a higher royalty with deductions is an opportunity to circumvent the law.  That leaves one to wonder how you can ever know if a law is upheld.  The point of the Pennsylvania’s Guaranteed Minimum Royalty Act (Act 60 of 1979) was 1/8th PERIOD.  End of story, landowner protected.

Permalink Reply by Larry Livengood on August 31, 2016 at 3:41pm

OK RB. Welcome to the club.

They will tell you that you are paid your royalty, then the deductions occur, just like your pay check.

As soon as they pay the royalties (I'm at 12.5% to start) they have met the conditions of the contract.  Then they take the deductions and do their creative book keeping, and what's left is all yours, even if they have taken 65% or more in fees.  At one time, you did receive the agreed amount.  Ex:  If the production is $1000, my 12.5% would give me $125.  I have been paid my royalty according to contract.  Now they get to deduct their fees which amounts to $100, they deduct the fees and mail me a check for $25.  All legal if you have a production cost clause.  

A lot of us  have no such clause, and they still take costs.   

That is what 1391 is all about, you can get nothing less than 12.5%, but it never gets a vote.  

Permalink Reply by alexandra on September 2, 2016 at 3:57am

I believe that law was overturned several years ago, and that is when the abusive deductions started. I think it was done by Pennsylvania's supreme court.  Not sure though.  I spoke to Sen Yaw's office two months ago and they are going to try to reinstate it in the fall of this year. 

Permalink Reply by kay moore on September 2, 2016 at 7:06am

FYI>>VERY IMPORTANT TO READ>>>I have been watching all the discussions about the deductions for the checks and have some IMPORTANT info to contribute...we live in Bradford county in the Towanda, Dushore area and in July we organized a meeting of about 100 Neighbors and our Commissioners Doug Mclinko,Daryl Miller and Ed Bustin and Sen Scott Wagner (28th Dist ..York) Landed his helicopter in our front yard ..one of our main goals was to get the house Bill HB 1391 out of committee and onto the floor. We did that by calling and emailing each person on the list we were given,to encourage them to vote to get this bill onto the floor ( where it has been stalled for almost 2 years)..and we did accomplish that..we all made our voices heard. so now the bill HB 1391 is sitting on the floor of the house and needs that same voice from all of us again. So Doug McLinko has ask us to help with that again...So I urge you to go on the web and google the Daily Review Newspaper, of Towanda and read the article he has published in the Sept 1 front page..read it very carefully to see whom he showed us to be contacting to cause the stir of the people in Harrisburg that should be helping us get what we should be receiving  in our royalty checks. Also in the Review Aug 31st Page A 11 is another article worth reading. Our small town hall meeting was held in a barn  on June 14th..and that also can be found in the Review on June 15th......what the commissioners and the Senator accomplished  got us was to stand up for our rights and we even got a meeting with some CHK people in Sayre in July...they wanted to meet with us one on one ONLY and we stood up and insisted that there be 12 of us and they finally accepted the offer...as usual CHK says they look at what it says in our leases as a GREY matter and we look at it another way. But it did get us some people to communicate with and to be able to contact. ( which we have had no one to contact for a very long Time)..Now one thing they were worried about was their safety with talking to a group and we had to show them we just need to talk to people who will try to listen to our complaints and take them to a higher source at CHK. So I would urge you to read these articles and especially about the tentative rally Doug is trying to get together... and tell your friends and try to get as many people to attend as we can. Because the date is tentative keep watching the Daily Review for updates and flood House Majority Leader Dave Reed's office with calls and emails asking for the bill to be scheduled for a vote NOW..or else it will go  unnoticed again..Sorry for being so long winded but want to ask everyone to try and attend the rally...Doug is counting on our help to get this HB 1391 passed.  Remember we need to be responsible adults(non violent) doing this and just make our voices heard and get this Bill 1391 to get to the floor for a vote... .Mr Reed's info...dreed@pahousegop.com... (724) 465-0220.. or  (717) 705-7173 ...Also I think a very important part of this issue not only are us the landowners losing money but the state of PA and our local businesses also have a big stake in the loss of revenue....Thanks so much  Kay  ALSO THIS IS MY FIRST POST, SO HOPE I AM DOING IT RIGHT SO EVERYONE IN OUR AREA CAN SEE IT....IF YOU KNOW HOW TO GET IT POSTED SO MANY PEOPLE CAN SEE IT, COULD SOMEONE DO FOR ME...THANKS

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on September 4, 2016 at 4:56am

Kay,

   Excellent Job!

I hope you can win out over the money being paid to your elected officials by way of Political Action Committee Funds (and "other" funds) handed out to each Shale Play State's Elected Officials.

When a company has to pay large sums to each states elected officials, you can bet they are doing something that violates the laws of that state and Our Nation, and transfers money from those at the bottom to those at the top.

Like we were told years ago by the New Management at work, if you have been here more than 10 years, You Are Part Of The Problem. I would say this applies to all politicians after 10 years, they forget who they are working for and become "Part Of The Problem".

Permalink Reply by kay moore on September 2, 2016 at 10:12am

JUST IN CASE YOU CANNOT GET THE NEWSPAPER ARTICLES..I AM SENDING A FEW OF THEM..LET ME KNOW IF YOU GET THEM OK..KAY



FYI>>VERY IMPORTANT TO READ>>>I have been watching all the discussions about the deductions for the checks and have some IMPORTANT info to contribute...we live in Bradford county in the Towanda, Dushore area and in July we organized a meeting of about 100 Neighbors and our Commissioners Doug Mclinko,Daryl Miller and Ed Bustin and Sen Scott Wagner (28th Dist ..York) Landed his helicopter in our front yard ..one of our main goals was to get the house Bill HB 1391 our of committee and onto the floor. We did that by calling and emailing each person on the list we were given,to encourage them to vote to get this bill onto the floor ( where it has been stalled for almost 2 years)..and we did accomplish that..we all made our voices heard. so now the bill HB 1391 is sitting on the floor of the house and needs that same voice from all of us again. So Doug McLinko has ask us to help with that again...So I urge you to go on the web and google the Daily Review Newspaper, of Towanda and read the article he has published in the Sept 1 front page..read it very carefully to see whom he showed us to be contacting to cause the stir of the people in Harrisburg that should be helping us get what we should be receiving  in our royalty checks. Also in the Review Aug 31st Page A 11 is another article worth reading. Our small town hall meeting was held in a barn  on June 14th..and that also can be found in the Review on June 15th......what the commissioners and the Senator accomplished  got us was to stand up for our rights and we even got a meeting with some CHK people in Sayre in July...they wanted to meet with us one on one ONLY and we stood up and insisted that there be 12 of us and they finally accepted the offer...as usual CHK says they look at what it says in our leases as a GREY matter and we look at it another way. But it did get us some people to communicate with and to be able to contact. ( which we have had no one to contact for a very long Time)..Now one thing they were worried about was their safety with talking to a group and we had to show them we just need to talk to people who will try to listen to our complaints and take them to a higher source at CHK. So I would urge you to read these articles and especially about the tentative rally Doug is trying to get together... and tell your friends and try to get as many people to attend as we can. Because the date is tentative keep watching the Daily Review for updates and flood House Majority Leader Dave Reed's office with calls and emails asking for the bill to be scheduled for a vote NOW..or else it will go  unnoticed again..Sorry for being so long winded but want to ask everyone to try and attend the rally...Doug is counting on our help to get this HB 1391 passed.  Remember we need to be responsible adults(non violent) doing this and just make our voices heard and get this Bill 1391 to get to the floor for a vote... .Mr Reed's info...dreed@pahousegop.com... (724) 465-0220.. or  (717) 705-7173 ...Also I think a very important part of this issue not only are us the landowners losing money but the state of PA and our local businesses also have a big stake in the loss of revenue....Thanks so much  Kay  ALSO THIS IS MY FIRST POST, SO HOPE I AM DOING IT RIGHT SO EVERYONE IN OUR AREA CAN SEE IT....
Permalink Reply by kay moore on September 2, 2016 at 10:49am

HOPE THESE COME THROUGH..

Permalink Reply by RB on September 3, 2016 at 3:08am
Good info
Permalink Reply by Dott on September 3, 2016 at 1:39pm

It seems I read a lot about the O&G companies taking out enormous amounts for post production and gathering etc. costs.  How about if you have a no deduction clause for these items but you do have a Market Enhancement Clause.  Can they and do they still rip you off with the Enhancement Costs? And is anyone out there with Chevron? Are they as bad as some of the others?

Permalink Reply by TreeMom on September 3, 2016 at 2:02pm
Gulfport is calling natural gas transportation market enhancement on natural gas only leases in Ohio - though the leases say no deduction for transportation, but they say transportation to other areas is market enhancement - taking roughly 25%. In Ohio.
Permalink Reply by Dott on September 3, 2016 at 2:33pm

Thanks TreeMom,

I wonder if its just all in how the lease is written.  My lease reads "Without Deduction provided however any such costs which result in enhancing the value of marketable Oil and gas in order to receive a better price may be deducted from Lessor share of production so long as costs are based on Lessee cost and in no event shall Lessor receive a price that is less than the price received by Lessee." 

I wonder if this wording is just another slick to be able to take huge deductions. Does anyone else have similar wording in their leases?  If so are they still taking huge deductions?

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