Royalties...finally

Finally started getting our royalty checks from Chesapeake and Stat Oil. I was a member here before but nothing was happening with our property and all everyone was offering was conjecture and hearsay. The checks we have gotten from our well in Bradford county are really not that good. We must have gotten an average production well. We have 15 acres in two units and the on that is producing is about 9 acres and the total checks between the two oil companies total about $1500 dollars for three months of production. The gas prices they sold the gas out was well below the well head price that you see on tv or on Marcellus shale forum. The gas was sold for over $1.50 less than you see everywhere and the amount chespaeake takes out for production is between 34-38 per cent which is ridiculous. Hopefully, the price of gas will rise in the future to give us a little more in royalties. Just wanted to post this because when I was a member before was kind of upset that no one would say what they were getting and told myself when i received royalties I would share the info. Really thought we would be in for a windfall but I guess it all depends on the output of the well and the thing is we only have one well drilled on the pad and it doesn't look like more wells will be drilled in the near future. Just have to hope the other unit I am a part of will produce better. If any one has any questions feel free to ask. Thanks

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Permalink Reply by Tico on December 4, 2012 at 10:02am
They sent me the form but before they even got it they sent the check and even tho I sent the same info a year ago they said they didn't have it.
Permalink Reply by j. rick on December 4, 2012 at 1:40am

That would be correct josie,providing 15 percent is what you settled for.

Permalink Reply by j. rick on December 4, 2012 at 1:42am

matthew, were these people signed thru landmen or an organized group?

Permalink Reply by Barbara on December 4, 2012 at 6:25am

my lease with CHK clearly states that all production costs and fees would be taken out BEFORE the royalty amount was paid; royalties are on the 'leftover' funds.

Permalink Reply by James T Monyak on December 4, 2012 at 9:05am

My CHK lease states:

"shall be without deduction, directly or indirectly, for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and marketing the oil, gas and other products produced hereunder to transform the product into marketable form; however, any such costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted"

I am not sure what enhancing means or if means no deductions.

Permalink Reply by daniel cohen on December 4, 2012 at 9:14am

James,

The wordage you listed is awesome, and should prevent deductions from being made in your case since you have specifically indicated the exact charges against your royalty check figures that CANNOT be deducted. If you are finding that you are indeed being so charged, there may be something fishy going on.

Just my impressions, but it sure might warrent getting some legal advice.

Dan

Permalink Reply by James T Monyak on December 4, 2012 at 9:54am

One should seek Oil & Gas legal advice before signing a lease.  In my case, I bought the mineral rights after the lease was signed. The only thing I can do at this point is to audit their payments.  Since I am an accountant, I should be able to accomplish this task as long as CHK is willing to provide details for the payments.

Permalink Reply by Barbara on December 4, 2012 at 11:56am

i did/have....not much help....sadly.  this in 2008 when things were just beginning to take off in bradford county....lawyer CLAIMED to have expertise....but i now know otherwise. the lawyers were steamrollered just like the rest of us.....or many of us....but they SHOULD have acknowledged that...

Permalink Reply by Oliver Perry on December 4, 2012 at 9:58am

 however, any such costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted"

There have been previous discussions about this last sentence of the clause in the lease. I believe it was stated this last part nullifies the rest of the paragraph in the no deduction clause. Correct me if I am wrong.

Permalink Reply by daniel cohen on December 4, 2012 at 10:46am

Wow! Are you saying that the insertion of a weasel clause could invalidate the contract terms? If so, then this is a legal issue about breaking a contract. Perhaps I'm reading this wrong-anyone else have some impressions on this?

Dan

Permalink Reply by James T Monyak on December 4, 2012 at 10:58am

You are reading it wrong. I believe Oliver is saying the weasel clause overrides the no deductions clause.  The clause does not invalidate the contract terms. Nevertheless, based on my experience in the legal cases the lack of defining the term "enhancement' in the lease the deductions will not be allowed if challenged in a court. The court would look at past practices on royalty payments. 

Permalink Reply by Carol on December 27, 2012 at 8:06am

Oliver - I think you are right - that clause just leaves it open for the company to find a way to take deductions.  They could say adding a pipeline is enhancing the value of the marketable gas. 

 

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