Replies to This Discussion

Permalink Reply by Barry D on December 25, 2015 at 8:34am

This issue has been dealt with several times in courts across the U.S.

Chesapeake has been involved in some of those cases.

As I recall, Chesapeake was successful ( meaning that post production deductions are allowed). Wellhead price - current price , or contract price, minus costs associated with the transportation of the gas.

I'm curious to see how much of the case law in those cases is used by the Judges of the OH Supreme Court in their decision.

• ▶ Reply

Permalink Reply by bo boboski on December 25, 2015 at 9:13am

from what I've been reading, Ohio may not be so nice to CHP. Just getting them to DO something will be the hardest thing. But, we'll see. Lawyers and courts seem to look at things in terms of YEARS, not weeks or months! So don't get too exited yet, Come Jan. 5th, they could just table it till next year.

• ▶ Reply

Permalink Reply by Joseph-Ohio on December 25, 2015 at 11:17am

You know, this  whole argument about 'Wellhead Price' / 'No Deductions' / 'Transportation Charges Allowed' OR 'the Price Paid As Would Be Paid To A Non Affiliated Customer  In An Arms Length Transaction'; and / or 'Previous Decisions' etc. really tends to get my dander up.

If the Lease defines 'Wellhead Price' as the raw price (-) Deductions then that would be the 'Wellhead Price' that would be used to calculate royalty to the Lessor.

If the Lease is a TRUE 'Gross / No Deductions / Sales Calculated On The Basis Of Being As If Sold To A Non-Affiliated Arms Length Customer' the 'Wellhead Price' seems to me would have to be different.

It all seems to me to be hinged on the definition within the prevailing Lease and especially so in the instances of previous rulings.  What did the courts find / rule on within the subject Leases defining the 'Wellhead Price' ?  Were they TRUE 'Gross / No Deductions / Sales Calculated On The Basis Of Being As If Sold To A Non-Affiliated Arms Length Customer' types of Leases or not ?

Seems to me we can't conclude that previous court rulings (especially those which ruled in favor of the Lessees) would be the 'Wellhead Price' definition to be used 100% of the time in any and every circumstance.

Trick is can you find an E & P that would sign a TRUE 'Gross / No Deductions / Sales Calculated On The Basis Of Being As If Sold To A Non-Affiliated Arms Length Customer' offer / sign off on ?  Does such a Lease even exist ?

Also, the terms 'Legal Fodder' and 'Deception' continue to come to mind when discussing these Leases / Agreement Specifications.

JMHOs

• ▶ Reply

Permalink Reply by Joseph-Ohio on December 25, 2015 at 1:05pm

I wrote above :

'Trick is can you find an E & P that would sign a TRUE 'Gross / No Deductions / Sales Calculated On The Basis Of Being As If Sold To A Non-Affiliated Arms Length Customer' offer / sign off on ?  Does such a Lease even exist ?'

Should also have written :

If such does actually exist has it ever been executed and adhered to ?  Or only executed and then changed / ignored / argued ?

From what I've been reading many have been executed but NOT adhered to and then argued over.

That's my take on it.

• ▶ Reply

Permalink Reply by Barry D on December 25, 2015 at 12:28pm

Search wellhead price on this site.

Some very interesting info.

• ▶ Reply

Permalink Reply by bo boboski on January 8, 2016 at 3:47pm

Any news on this case?

• ▶ Reply