One thing to remember is the price of natural gas that we are paid has a huge impact on the percentage of royalties. When gas was $6.04 my deductions were 9%. Last month with gas at $1.08 my deductions were 56%. Southwestern will charge you about the same for a certain amount of gas. As the price of gas goes down the percentage of royalties goes up but they didn't charge any more than usual for that amount of gas.
I have tried to compute a charge per mcf, never get a similar or consistent charge. Also their selling gas at below market prices to a subsidiary to reduce royalties is another matter. When the rate is $2.40 and my royalties are based on $1.12, I have to wonder.
I could be wrong, but I think the price they can fetch per mcf in Appalachia is lower than the "Henry Hub" prices you see, because of a glut of gas in the region, not enough infrastructure to move it, etc. Even if that is the case, it is still a load of BS for the landowner, but maybe someone who knows better than I can chime in and clarify here. I think I have heard this a couple times. There are at least some of the companies that pull the subsidiary BS as well.
$2.40 as in Henry Hub or what's posted at the top of this page?
Royalties are paid by CHK on past production. My royalties this month was for May, so you have to find the past prices or keep a log. Can''t use today's prices. I will be getting the June royalties the first of September. They are "holding" three months of your money, then taking deductions on top of it.
Yes, I understand that. Southwestern does the same.
I was paid above the Henry Hub prices once when we got $6.04. There were some CHK wells that got paid $9.00 that same month when the Henry Hub was at $6.00.
This is when the total deductions were 9%. Now that the price is much lower the deduction % is much higher.
Yes, this is important to remember. In my statements I have seen deductions as high as ~78% and as "low" as 30-40%, all depending on the price of nat gas.
CHK will not identify their middle man. I suspect, without any proof, that it is one of their subsidiaries. They have set up dummy corps before, then when things went south, they claimed that company was at fault and declared bankruptcy on it. End of line.
More than likely!