I just got my 1st royalty check and was disappointed.

I didn't expect a lot for several reasons but didn't think they would be taking so much out for "gathering" (34%), and also a little for "third party". Total deducts came to 37.5% which I thought was excessive.

Does this seem normal?

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Chesapeake has been charging .59 / mcf.

Seem outragous for oft but 2-3 miles.

UGI brings gas from the GOM to Maryland for .30

 

What can we do ?

 Acouple of years ago a group sued Range for deducting up to $1.80. Range settled for not charging more than $.80 for dry gas and $.85 for wet gas. So it appears CHK is less than that.

It's interesting that now everyone is looking for wet gas as being of higher value, but then they were deducting more for processing vs dry. 

CHK has been known to be more than happyto deduct more than they should and for things that they shouldn't. It can be somewhat time consuming but well worth the effort to get to know and understand your lease and the checks that are being sent to you. Just having a basic understanding of the wool they are trying to pull over your head makes it much easier to call them on it.

I would ask for an explaination of their "gathering" cost and go from there. Also, look into how many of the potential 6 wells is your royalty being calculated by. CHK for the most part drills 2-3 of the potential 6 and moves to the next well pad. There really is no time table for completionof the remaining wells. Basically you will get low numbers for a longer period of time.

I would guess that CHK is also not producing at max pressure. Or at least I would hope they ar not. Given the low gas rates I wouldn't want maximum production until a bettr rate can be obtained.

First of all they only drilled the one well. Hopefully they will be back sometime to drill more. I only have 5.8 acres of my property in this well pool. My other acres are waiting for them to return and drill another well in another well pool. That probably won't happen for several more years at this rate.

My check was for July/Aug/Sept and I did use the above reasoning to calculate the percent deducted.

gross - net = deductions

deductions divided by gross = 37.5% for Chk and 20.18% from Statoil

My original reason for this post was to find out if this seemed reasonable and from what I am hearing it sounds excessive. Now I need to call them...

For Sep and Oct '12 SWN deducted $0.47 / Mcf.  This represented 20% and 18% of the price paid for those months. Their statements show specific amounts for compression, gathering, marketing, and 'other'.

Marty, when you read your statement are the specific amounts listed under comp., gathering, marketing & other listed for both your royalty share and the total royalty for the unit?  In other words is the $0.47 being deducted from the $2.68 for your Oct. royalty?

Since no deductions are taken on my royalties on the 'Owner' line, I was surprised to see the deductions and net calculation listed on the 'Gross' line.

Correct, but those are deductions for their tax purposes.  Since no deductions are being taken out on the "Owner' line we are assuming no deductions; correct.  My lease says no deductions; pre or post.

My original use of the term deductions is probably inaccurate.  I found it interesting that that since they weren't deducting anything from my royalties, they would list these items and show the 'net'.

I agree, again it is probably for their records to see what it costs, by unit, to deliver the gas to maket.  Also some SWN royalty owners may be paying deductions.  I was quite surprised by some of the deductions Chesapeake was taking out.  I'm still pretty happy with SWN, they have always been fair to us. 

Look up the Pa Supreme Court ruling in the "Kilmer NG Royalty" case.... the guaranteed 12 1/2% royalty after deductions for landowners went out the window.... You pretty much end up with whatever they are willing to pay.  My case is weird Royal Dutch Shell and Ultra petroleum has a 50:50 division order; Shell pays 100% of the 12 1/2% with no deductions,  and Ultra hammers the crap out of my check with every deduction imagineable... and sells the gas for about 30% less per MCF than Shell does.... I think they are just selling it back to Shell at a cut rate (to landowners anyway)... and all the Petro Companies are "Happy".... a real  "Shell Game" as it were ... Pun intended...

CHK hints at that in the disclaimer on their interest owner statement. "Gross Value refers to the sales price received by the operator/lessee before deduction of taxes. It may reflect the price received from an affiliated purchaser."

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