Replies to This Discussion

Permalink Reply by Tom R on December 31, 2013 at 6:17am

I am seeing the same thing. Statoil had sold at higher prices than CHK and Anadarko but dropped over $1.00 for September production while the others maintained price levels. Also noticed at same time check issuer changed to JPMorgan Chase. Wonder if that is somehow connected? I also called, don't really expect any prompt reply. Based on previous attempts to communicate they take several months to respond to voice mail and I've never gotten a reply to a letter. E-mailed them a couple of days ago about this, no response yet.

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Permalink Reply by Diane Seymour on December 31, 2013 at 9:10am

Same here - significant drop in price last month and now down to 45% less in December (for Oct production) than CHK or Anadarko.  Will try to contact Statoil, but don't have much hope.  I'll post here if I do get a reply.

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Permalink Reply by howlin on December 31, 2013 at 11:40am

Good luck with that.  i've called numerous times with no return call. I'm considering sending a registered letter.

 There is no way their price can be THAT different than three others in this contract. I smell a rat and so do the county commissioners. There is nobody keeping them honest and it doesn't seem that our state government cares either. Wish I knew what to do.

 

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Permalink Reply by Jim Litwinowicz on December 31, 2013 at 12:43pm

What may be happening is that these companies all have hedge divisions to protect themselves from price swings.  A couple of years ago Range hedged their entire year's production and made out very well.

What they do is sell into futures contracts when they feel the prices are good, short prices when it benefits them. So Stat may have paid higher then others because they had a great hedge position that locked themselves into a higher price.  Now they are selling at market price when the other companies have a good hedge position.

Thats just a guess on my part but it helps to explain some price discrepancies.  Of course, they just might be all crooks.

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Permalink Reply by Golddigger on January 1, 2014 at 4:51pm

October 2013 payments as follows:

Talisman -          $3.39

Chesapeake -     $2.99

Anadarko -         $2.96

Mitsui -              $2.68

Stat Oil -            $1.65

All in Bradford County,Pa.      Stat Oil is pathetic!!!

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Permalink Reply by Barbara on January 28, 2014 at 6:32am

imagine that......crooks??????  in the gas industry??????  

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Permalink Reply by Zack Smith, Geologist/Appraiser on January 2, 2014 at 8:32am

I'm a geologist working in oil/gas appraisal and valuation and have seen the same thing with some of my clients. What unit are you in? And does your lease allow for expense deductions? One explanation is that they are applying an expense deduction to the wellhead price.

The second option is that they using the royalty clause where it says they pay you a percentage of "the amount realized from sale". In one instance, Stat sold majority ownership of well pads to another company, sold their gas to that company at a discount, then the pipeline (which they hold ownership interest in) bought it back still at discount and then resold it at a distribution point for market price. Because Stat Oil and the Pipeline company are technically separate legal entities Stat can legally sell the gas to the pipeline at a huge discount and claim that is "the amount realized from sale" even though they are basically selling it to themselves. Nifty accounting tricks....

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Permalink Reply by howlin on January 2, 2014 at 12:41pm

I have a Friendsville lease with no deductions whatsoever. Price is to be determined and adjusted for BTU at the wellhead. No such clause in my lease.

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Permalink Reply by Tom R on January 3, 2014 at 4:47am

The drop in sales price shows up in the "Well Description" and "Lease Gross Value" parts of their statements. They show no deductions for expenses at either the unit or individual royalty owner level. I am in the ATGAS unit and have a lease with the "Market Enhancement" clause. Statoil is a minor partner in the well (about 16% participation) and up until September production had shown a sale price a few cents more per mcf than CHK and Anadarko. The other two have taken deductions ever since the well went into production and itemize them on their statements. For September and October production, the prices Statoil lists are more than $0.50/mcf lower than the net price realized from the other's shares.

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Permalink Reply by howlin on January 3, 2014 at 6:48am

It would be nice to know what what actions should and have been done about this. I know it seems like pennies but if one gets away with it they will all follow suit.

 

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Permalink Reply by Jim Litwinowicz on January 5, 2014 at 4:42am

Howlin; when negotiating a lease, be sure to have a clause that says royalties are calculated on sales to a non-affiliated company....must be an "arm's length" transaction.

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Permalink Reply by INVICTUS on January 28, 2014 at 1:13am

Jim, I have question for you if you able to provide assistance.

Some background:

I have that clause in my lease (Gross at the wellhead/non affiliated/Arms length, etc.

I also have audit rights (at my expense, W/notice).

Aside from legal action (discovery/interrogatories, etc), what actions can a leaseholder take beyond

1)Written demand for correction letter;

2) Audit,

3) Threat of legal action?

My perspective is that we have a lease and I expect to be held to my end of the bargain.

I ask the same of my new partner (O/G company)

Finally, I to am interested in what index/indices are to be relied on for pricing "At the wellhead". In other words, How does one even know what valuation at the well head is justifiable?

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