CHK deducting for NGLs

(Cross posted from the Carroll County group)

I'm seeing this for CHK units from the Putnam and Garner well pads. I'd be interested to know if anyone is seeing it from non-CHK operators.

A message from Brian Werner to all members of Carroll County, OH on GoMarcellusShale.com: Discussing the Marcellus & Utica! I am in the Morsheiser 5H well in western Carroll County Ohio. Over the past year the NGLs have gone from being sold to being something that CHK is paying to get rid of. Over the last three months, the cost of getting rid of them is climbing exponentially (-$.29/gal in June). This almost offsets the price that they are selling the gas for and a with the current trend I am expecting the cost to get rid of NGLs to exceed the income from the gas sales next month. In June CHK netted only $.18/ MCF when the gas and NGL sales were combined. Is this going on with everyone in Carroll county, or just the Morsheiser 5H well? The Morsheiser 10H well is also in production from the same pad, and I'm wondering are those land owners seeing a similar cost? Enervest's Cairn 5H well unit almost abuts the Morsheiser 5H unit but they are continuing to sell their products profitably at market rates. CHK is selling gas at lower prices than Enervest to begin with, so that just makes the negative NGL sales hurt even worse.

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Permalink Reply by Undecided About Oil on September 11, 2015 at 9:16am

Ron,

Did you see this post?

Law_Suit

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on September 11, 2015 at 2:26pm

UAO,

    I have a lot to say about CHK.

Think I'll say it where it counts, in front of a Judge. Maybe not the Ohio Supreme Court since their blindfolds that ensure justice recently slipped down their faces.

No citizen of Ohio will fail to see the injustice of the Royalty decision they recently made.

I think I'll stop paying my mortgage then go before the HONORABLE justices and ask that my contract be honored by the bank in spite of my failure to give them the only thing of value in the contract, a Mortgage Payment.

The case for "Separation Of Corporation and State" now has its poster child. It will only get worse from here.

One more thing. I doubt anyone reads my posts at the landowner level.

App Basin Landowners that has a nice ring.

Permalink Reply by Brian Werner on September 15, 2015 at 2:48am

I did initially receive positive royalties for NGLs when the sale price was positive. To add insult to injury, positive taxes are deducted for the negative sales with negative royalties. So I'm paying taxes on the negative sale just as if it were a positive sale. The state wins either way, which may explain why the landowners get little support from the government. I've attached a graph of the sale price for NGLs for the history of the Morsheiser 5H well. Even when the sales were positive the sale prices were less than half of the EIA published sale prices for NGLs. There may be legitimate reasons for Utica sales or Carroll county sales or this particular well sales to be lower than the EIA published values, but it is the only benchmark that I have found so far.

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0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on September 15, 2015 at 1:35pm

Brian,

    You have to add the negatives and positives for Product Code 4 to get the resulting royalty payment. I'm betting you just looked at the positives. You wouldn't be paid any differently than Buck Well 1H.

I'm betting you failed to include the charges for NGL processing. Like I said before, when Buck Well 1H made $8,000 for NGLs Chesapeake charged us $24,000 for processing more NGLs than were removed from our well. Part of a plan to have landowners pay for processing and infrastructure. Why not, no one is watching that matters.

If you really did make a positive amount you would have collected my Award for winning the NGL Challenge. If you make a positive amount after deductions, EVER, you win the $16 I was just paid once again for one acre per month on Buck Well 1H.

It amazes me that no matter what CHK takes, I always recieve $16. Maybe that will stop with the Ohio Supreme Court ruling that a lease can't be terminated due to failure to pay royalties.

It's actually an insult to every landowner in the state to be paid a fraction of what they should be being paid for a royalty. Maybe we will all get together and go to court some day soon, or not.

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