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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from News One:

Transcript: Vote To Block Chesapeake

good evening, i'm jeff stone. thanks for joining us tonight. amy simpson has the night off. a northern tier township may be taking a stand tomorrow night against a major gas drilling company. wilmot township supervisors will be voting on a resolution to not let chesapeake energy take anymore gas from township wells until they start paying landowners what they deserve. that's according to bradford county commissioner doug mclinko who says county commissioners support the move. mclinko says property owners are supposed to get at least 12 and a half percent of the value of the gas drawn from their wells in their royalty checks. but chesapeake and other companies are circumventing that required minimum by improperly deducting expenses such as compression and transportation costs from royalty checks. mclinko: "why this is important, what's going on in our county is with how it even affects our friends across the border in new york state is, they're taking money directly out of our economy, money through work and stuff that would be spent there and most of our properties as you know are smaller properties. people aren't getting rich." mclinko admits the vote is just symbolic... it can't be enforced. it's part of a larger effort to get a state house bill approved that would ensure pennsylvania gas royalty checks never go below 12-point-5 percent. he says in some cases so much is deducted from their checks the property

http://www.mytwintiers.com/news/local-news/wilmot-townhip-superviso...

Wilmot Townhip Supervisors Vote Tuesday on Blocking Chesapeake

Symbolic vote would protest post production cost cuts in royalty checks

JEFF STONE

By JEFF STONE | jeffstone@wetmtv.com

Published 09/05 2016 11:48PM

Updated 09/05 2016 11:48PM

  • Vote To Block Chesapeake

A Northern Tier township may be taking a stand Tuesday night against a major gas drilling company.
 
Wilmot Township Superivisors will be voting on a resolution to not let Chesapeake Energy take any more gas from wells in the township until they start paying landowners what they deserve.
 
That's according to Bradford County Commissioner Doug McLinko who says county commissioners support the move.
 
McLinko says property owners should get at least 12 and a half percent of the value of the gas in their royalty checks.
 
However he says Chespeake and and other companies are circumventing that required minimum by improperly deducting expenses such as compression and transportation costs from royalty checks.
 
McLinko says the practice is taking money directly our of the Twin Tiers economy.
 
He says most of the property owners being hurt have small properties adding that these people aren't getting rich.
 
McLinko admits the vote is just symbolic. It can't be enforced.
 
It's part of a larger effort to get a Pa. House bill approved that would ensure Pennsylvania well owners royalty checks never go below 12.5%.
 
He says in some cases so much is deducted from their checks the property owners actually get bills instead of checks.
 

Just started getting Royalties from SWN 7 months ago. We are averaging from 2% to 6% and they are keeping the rest in deductions! We are just disgusted. How long before we start getting bills.

There is a need to organize at the State level.

Everyone is being stolen from....The State, the County, the townships, the school districts, the landowners, the local businesses.

Hoping that House Bill 1684 gets passed by the House this fall. It has been years since it was first introduced. If it gets through the House it goes to the Senate. I just have no faith in our government at any level. They seem to be for big corporations, not their constituents.

I have said the same things that you mentioned to my state reps regarding the loss of tax dollars to the state because so many people are getting screwed out their royalties. The state is always crying poor mouth yet they are letting all this money slip out of their fingers. It's insane.

Give me my money and I have no problem paying taxes on it.

The royalty clause may not address deductions explicitly.  It may say something like "1/8 of the net proceeds for gas sold at the wellhead".  This language says much more than the few words might indicate to someone not familiar with oil and gas law.  The point of sale is important.  Gas sold at the well will receive a lower value than gas sold down the line or at the processing plant.  Gas sold at the well head will also receive a lower price if it needs to be dehyrated, compressed, treated or processed in any other manner.  There are so many different royalty clauses in use in eastern Ohio, that this discussion is of little value without comparing the exact language.  Some leases say net proceeds, some say market value, some say gross proceeds.  Some have specific language addressing deductions for gathering, compression, dehydrating, treating or processing.  Others do not.

For those complaining, I would suggest getting in touch with your state representatives.  Complaining on this forum doesn't do much.  There should be enough representatives from eastern Ohio in the legislature to get a statute addressing these issues.  The statute should address deductions allowed, or not allowed, in the absence of specific lease language. 

The transcript below is a typical example of people with little knowledge of oil and gas law opining on the issue.  If landowners are to get 1/8 of the "value" of the gas, where is that value measured?  If at the wellhead, the mineral owner will be responsible for getting it to the point of sale by the operator to the gas purchaser.  If the gas purchaser requires it to be dehydrated compressed, the "value at the wellhead" will be reduced to reflect those costs.  This is why it is so hard to  create a statute providing how mineral owner royalties are paid.  One of the best statutes from the landowners' view is found in Wyoming. 

Looks like people are finally realizing NG co's are not the friendly neighbors they claimed to be .Screwing people out of their royalties has become the norm.Next time maybe we all won't jump the gun on leasing before we know the game !

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