Has anyone else noticed a significant drop in their price per BTU from Chesapeake? For February production we received $2.49 but for March we received $1.75 and April we received $1.80? Talked to a Chesapeake customer service rep who said that was the price that CHK was getting from their customers even though the market price for Nat Gas was relatively stable. He had no other explanation.
To keep royalties low, companies sometimes set up subsidiaries or limited partnerships to which they sell oil and gas at reduced prices, only to recoup the full value of the resources when their subsidiaries resell it. Royalty payments are usually based on the initial transaction. Chesapeake is known for this.
Wow - doesn't seem like that should be legal. Thanks for the info!
There are many reasons this is happening, I would not be in a hurry to suggest they are ripping you off although it is a possibility. It would be nice if every unit had a group of its participants who pooled their resources and hired an attorney to help them in situations such as these, so you and we know what is really happening.
I believe that if you have a glut of gas coming from a particular area it will suppress prices if the processor has more than they can sell.
I wish you the best of luck, please keep us informed if you find any additional information.