I got my 1st royalty check a few weeks back and the wellhead price about made me sick. Is there a way to verify what was paid at the time of purchase. I know prices are down but this was real low.

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What drilling company do you have? We have Range Resources and they are paying us what the price was 3 months ago. You can tell they are turning down the ppressure, we even have 20 wells online.... We need the prices to go back up!

Dalmorloson,

     Welcome to the Unhappy Club.

Yes, Oil, Natural Gas and NGL prices are available for each month, which need to averaged for the month when several prices show up over the month.

I'll let someone else tell you their sources. I need to find the hard copies I made that show my sources.

If you know how to use and XL spreadsheet, you can plug your numbers into the attached spreadsheet and the math will be done for you.

Good Luck Dal

Attachments:
Rice owns the well. What I'm looking for is a way to verify that what is on my statement is actually what was paid by the buyer. Is that possible or do we just take their word for it?

Dal,

     What state are you in? Ohio ODNR takes voluntary volumes from the producers, assuming they are honest. WV and PA have an equivalent group that asks for product volumes. You can check the volume on your royalty statement which will be less than reported to the state. Something to do with using your product free.

Now all you need are the monthly average Fair Market values, your original question.

I'll take a look once you tell me which state you are in.

Your producer more than likely takes the NGLs and tells you they don't exist.

I am in Ohio

What part of Ohio?  Certain areas (eastern 2/3 of Belmont County, most of Monroe County, all of Jefferson County) are primarily dry gas and there would be no NGLs to sell.

Natural gas prices in our area are very low because of the glut.  Not enough pipeline capacity to get enough of the product outside our immediate market.  Locally we are seeing about 50% of Henry Hub price.

What I'm asking is this...is there a way to verify production and sale price? Or do I just assume that everything on my check stub/statement is accurate?
Do you have the right to audit written in you're lease?

you ask 2 questions............the answer to both is - no

Dal,

     Below is a good source for well product prices in Ohio.

The ODNR will accept well volumes produced from your well by your producer using the Honor System each quarter. You can use those volumes to check how much you have been shorted.

The ODNR doesn't check to see how much they have been shorted by producers, which is a shame.

What other entity in the US runs a business like a coffee fund? Take what you want, tell us what you want, no one is watching.

http://www.eia.gov/dnav/ng/hist/n3050oh3m.htm

Pardon my ignorance if I'm wrong here, but if he's trying to reconcile his royalty payments, wouldn't the wellhead price be more appropriate than citygate price?  I would think the lessee would have already sold the gas (and owe royalties) prior to delivery to a local utility. There's no one getting $3.98/Mcf, especially in our area.

I'm not necessarily saying I was shorted anything. I guess I'm just not as trusting as the state is. I would like verification of production amounts and selling price, but I guess it's not set up that way. I wish the state would let me report how much I make each year and then pay taxes on that amount...strange.

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