Rice profits up but royalties down ?

Can anyone explain how Rice Energy profits seem to keep going up, while all the other companies are losing money, yet royalty payments are going down?  If the market is so depressed how are they doing so much better than the rest?  Thanks for any thoughts.

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Permalink Reply by Dalmorloson on November 10, 2015 at 3:30pm

My royalty payments from a Rice well have gone down due to the selling price of the gas, but production has been relatively the same.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on November 11, 2015 at 2:33am

Read the Hope Church vs Chesapeake Complaint.

When you understand all the ways a producer can short change a landowners royalties, then you may be able to see some of those methods on your royalty statement.

As we all know one unethical producer can influence other producers to act in a similar fashion when they realize landowners complain without taking action.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on November 11, 2015 at 2:37am

Attached is the Hope Church vs Chesapeake for your review.

Attachments:
Permalink Reply by Gary L. Ford on November 11, 2015 at 2:46am

Thank you.  I will review the opinion.

Permalink Reply by Tyler James on November 11, 2015 at 3:59am
Ron,

Seems a bit unfair to group all producers under the umbrella of a possibility to be terrible. I happen to know an extremely greedy O&G attorney, a real piece of work. Does that mean that if his clients don't take action against him that maybe you should take on some of his tactics?

Please don't take it as a personal attack.

TY
Permalink Reply by DONNA M SELLERS on November 11, 2015 at 9:59am

my checks with Rice have went from (WHEN CHK) OWNED MY WELL 1,500.00 TO NOW (RICE) HAS IT TO A BIG FAT NOTHING THIS MONTH.....Curtailed they say...wish I knew how much they are still making or taking to the bank?

Permalink Reply by Lynn mudder on November 11, 2015 at 10:20am
Not good! Not what I want to hear. Can I ask on how many acres?
Permalink Reply by DONNA M SELLERS on November 12, 2015 at 1:30am

Im in a 540 acre unit...I have 15 that I own.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on November 11, 2015 at 11:35am

The question asked was:

"Can anyone explain how Rice Energy profits seem to keep going up, while all the other companies are losing money, yet royalty payments are going down?"

If your royalties keep dropping while the producer is doing well, consider learning how to spot theft.

If your producer is a saint and you are making millions, you don't have to do a thing but enjoy spending the cash.

My Father In Law learned in the 60s that oil and gas companies don't treat the landowners fairly. It's just the way it's always been.

Permalink Reply by Gunner Ostergard on November 11, 2015 at 11:56am

If your lease does not allow for any production deductions,  (which many Rice leases do not)  then royalties are simply gas production x the price of gas.  Simple as that.  And if you have been following the price of gas it is historically low right now.  As far as Rice making a profit,  good for them.  If they can make a profit with these low gas prices,  they must be running a pretty tight ship.  Also,  if you compare gas production on Rice wells,  compared to Range or other company wells,  you will see that Rice wells just far out produce other wells.  This is public knowledge and can be fact checked on the DEP website

Permalink Reply by Tyler James on November 12, 2015 at 3:35am
I just have a problem with the generalization Ron. I do not like generalizations. A large amount of the population thinks that Attorneys don't treat their clients fairly, "that is just how it has always been." You sound like one of the good guys, people should not look at you in a negative light because of a few bad attorneys. Trust me, I wish you well in all of your endeavors against the bad guys, I think we all have a pretty good idea of who is on that list.

-TY
Permalink Reply by Jim Litwinowicz on November 12, 2015 at 6:02am

While it is entirely possible that Rice is manipulating royalty statements, there are other explanations. Perhaps their newer wells are producing much more.  Seems common in the industry that wells get better as they gain more knowledge in fracking.  Another is the cost per well is dropping dramatically.  Drilling faster, lower fees by subs due to depressed activity, lower labor costs, less exploratory drilling, drilling in sweet spots, drilling multiple wells/pad.  All lower costs and increase profits.

And since wells deplete is not only common but almost a certainty that royalties will decline over time, unless new wells are drilled.

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