In light of the recent downturn in gas and oil prices,I see a drastic uptick in negativity and doomsday talk.
Out of curiosity,I think it would be interesting to know just how much of a stake each of us really has in this play.
Please reply with following:
Twp./County/State/#Acres/Co.leased to./drilled or not/getting royalties or not

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Been all over the board with the crazy natural gas prices.  Last July when Henry Hub was $2.84 we got about $775 an acre at 16% royalty.  In Sept HH was at $2.66 and we dropped to  $700 an acre.  We are currently running about $475 an acre with the low prices.  Deductions all over the board too (already deducted from above per acre) but they run from 14%-28% each month. Our lease is suppose to be no deductions other than "market enhancement" but that definition seems to be interpreted differently across the board,     

Interesting about the no deductions. Our lease pretty clearly states gross royalties with no deductions. Quoted directly from lease: "Gross Royalty: it is agreed between Lessor and Lessee that the percentage of all oil, gas or other proceeds accruing to the lessor under this lease or by state law 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 or other products produced here under to transform the product unto marketable form." Additional addendums in the lease state "All references made herein to one eighth royalty shall be amended to eighteen percent (18%) gross royalty."  and  "Lessee agrees that if and when any penalty, rollback or recapture of tax abatements created or imposed under any governmental program such as , but not limited to CREP, CRP, and Clean and Green that is levied on Lessor solely as a result of Lessee's operations on leased premises, Lessee will reimburse Lessor upon written request and copy of the penalty notice." As I believe we are with the same gas company, I'm very curious if you had similar terms and they somehow managed to still take deductions. We covered everything we could think of before signing but you never know, I guess. Definitely interested in what you think. Thanks!


Get ready to devote some time to this when the royalties start.  It is confusing with no apparent rhyme or reason.   We have the market enhancement clause that states that all oil, gas,or other proceeds 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 herein to transform the product into marketable form;....however any costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted from the Lessor's share....

The way this was explained by the attorney at signing was if gas was being sold for $1.50 but Rice/Gulfport enhanced it to get $1.75 for it we would pay our share of the $.25 enhanced value.  

Initially we were getting a pretty good price so I could rationalize the deduction. But recently I have noticed  that we are getting 27 cents less than another landowner in the area yet still being charge the market enhancement deductions on top of the lower price.  So...I am getting ready to start my calling/writing campaign to try to get some information to see if an error was done or some type of explanation.  I hear horror stories when it comes to trying to get info from the OG companies on royalties/deductions so wish me luck :-)  

I also think this highlights the importance of us as landowners sharing information... and using that information responsibly.     


Thanks so much for the information and I believe that the clause stating that there are no deductions consisting of all of the above ending with " transform the product into marketable form." should cover any enhancement in order to market, I would think. It also states neither directly or indirectly so if you have the same clause in your lease you might challenge those deductions. I certainly would. At this point I'm not putting the cart before the horse, Landowner Info dept has kept us as informed as possible so we know our gas went to market on Dec 15th and they said royalties would begin March (this month) however we have still to receive our Division Order paperwork (which they've assured me several times are almost finished). They did send me the decimal equivalent and formula to compute (as well as the copies of the filed declaration of unit, which are public documents but I was pretty pesky on getting unit size information as well as whether our entire acreage was included; which it is), and I was able to get the production amount for for the pad for the 17 days in Dec so can widely estimate approx royalty using the lowest price in Dec. I am not however putting the cart before the horse as delay seems to be the word, here. It seems they are thinking there may be royalty pymts prior to distributing the Order of Division paperwork, which makes me a little uncomfortable, even though they gave me all of the figures and how to figure our our portion based on the statement, etc, to reconcile, I guess. At any rate, I've always believed that knowledge is power and the squeaky wheel ALWAYS gets the oil. Keep us updated on what you are able to accomplish in the deductions situation. Our gas is dry and can go straight to market and Rice has been smart with infrastructure so can get it there, even owning portions of the distribution pipeline. I am very happy we were able to work with Rice. I do however expect the terms of the contacts to be followed and no playing with words. Gross royalties is GROSS ROYALTIES, with no deduction, particularly when spelled out as clearly and in as much detail as is in the leases. I wish you much luck and prayers for a good conclusion. Thanks so much for you informative reply. It is greatly appreciated!


You've written that your lease contains the phrase :

'....however any costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted from the Lessor's share....'

Considering all else you've written above, that one confuses me too in that it doesn't mention that the Lessee shares the cost of 'enhancing the value of the marketable oil, gas or other products'.


Best of luck and well wishes in all this.

Joseph it does - I just didn't keep going with the phrase as that was the wording in question.  It does say that I'll pay my proportionate 16% and they pay their 84% of the costs.

Thanks KAS.

A comfort to read even for us awaiting attention in the northern tier of the 'fairway'.

Good luck neighbor.

Kindly wish us the same.


     Good for you, someone being paid a sizable royalty now days is rare.

Your producer must be waiting to see how Chesapeake does with their rationed royalties which are now zero for most landowners. My $14 an acre dropped to 50 cents an acre since a new well started paying me at a rate of $160 an acre. I believe Chesapeake has the new well Paige 5H wide open to get while the getting is good.

They are making 5 tanker truck pick ups per month but reporting a maximum of 35 barrels on a single pick up. This well must be HUGE, but the landowners will never know it.

I called several landowners who have gotten no royalties and no Division Order. In fact I haven't gotten a division order yet. I had to call Chesapeake and request a Division order for myself and ask why no one else has received one. Chesapeake is only violating Ohio law doing this, but it's a small violation compared to the overall theft they are committing.

Ron, I find it incredulous that you are not being paid for the NGL's that are being taken from your land! NGL's are certainly worth a lot of money...173,000 bbls of it were shipped to a chemical company in Europe today from the Marcus Hook export plant in Philly.

The lowest royalty I have been able to verify around here, Guernsey county, is still over $400 per acre per month, and those were leases flipped from the old Oxford lease to a 12.5% gross with deductions.

Just realized I needed to clarify that we have 3 wells on that pad so that per acre amount is for all 3 wells. Divide by 3 to get per well amount.  We also do not get Henry Hub price.  Was just using that as a reference.  It is always less than HH but how much less varies.  

80 acres on the wetzel tyler county line in wv. Leased with gastar. They extended the lease jan. 2014. No drilling. Also Leased 2650 feet of gas right of way.


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