Royalties...finally

Finally started getting our royalty checks from Chesapeake and Stat Oil. I was a member here before but nothing was happening with our property and all everyone was offering was conjecture and hearsay. The checks we have gotten from our well in Bradford county are really not that good. We must have gotten an average production well. We have 15 acres in two units and the on that is producing is about 9 acres and the total checks between the two oil companies total about $1500 dollars for three months of production. The gas prices they sold the gas out was well below the well head price that you see on tv or on Marcellus shale forum. The gas was sold for over $1.50 less than you see everywhere and the amount chespaeake takes out for production is between 34-38 per cent which is ridiculous. Hopefully, the price of gas will rise in the future to give us a little more in royalties. Just wanted to post this because when I was a member before was kind of upset that no one would say what they were getting and told myself when i received royalties I would share the info. Really thought we would be in for a windfall but I guess it all depends on the output of the well and the thing is we only have one well drilled on the pad and it doesn't look like more wells will be drilled in the near future. Just have to hope the other unit I am a part of will produce better. If any one has any questions feel free to ask. Thanks

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Permalink Reply by Jack Straw on December 1, 2012 at 9:19am

Thanks for coming back and letting us know what has occurred.

Hopefully a number of things will occur that might result in an increase in royalties:

A build out in pipeline infrastructure such that your gas sells at a price more representative of other areas.

Improvement in Natural Gas prices (across the board) as we crawl out of the "Great Recession".

Hopefully CHK's deductions will decline over time (as more infrastructure results in lower pipeline charges).

Hopefully CHK's deductions are a "fixed" amount and will represent a smaller percentage as prices realized for the natural gas (and any NGLs) improve.

Hopefully there will be additional wells drilled in the unit, for which you will receive a share.

 

Again, thank you for having the courtesy to return and share your experience.

All too often, once questions are answered, people disappear ... and we are left with only half a story.

 

Good luck, I truly believe that things can and will improve for you.

 

All IMHO,

                 JS

 

 

Permalink Reply by Tico on December 1, 2012 at 9:49am
Thanks, Jack for your kind reply, paul
Permalink Reply by Tico on December 1, 2012 at 10:16am
Yes one check from Chesapeake was for about $500 for three months they took out $360 for production and $300 for taxes that they are sending a check for,, the other check was staoil and that was for about $475 and there deductions were lower,, 22 per cent,, the unit size is 630 acres,, Chesapeake sold gas for an average of 2.40 while stat oil sold for a little more ,,about 2.90, didn't say who gas was sold to, and yes all dry gas, but stat oil shows it might sell ng liquids but I don't think I'm in that area,,that was for July august and September,,
Permalink Reply by Jim Litwinowicz on December 1, 2012 at 11:17am

Tico; Nice of you to post.

$1500 over three months means $500/month for 9 acres in a dry gas area. That isn't very good, only about $56/acre/mo  The sale price quoted is very low......could it be that prices in your area are depressed due to high production/poor transportation? Is that what people in other units are getting? Prices in summer were historically low and have rebounded some, maybe next checks will be better.

What is the base royalty in the lease? CHK taking out 34-38% is a lot. If its an old lease at 12.5% that leaves only 8-9% for you. And old leases allow for a lot of deductions. And how long did it take to get the well online and how long after that before you got the first check?

Hopefully Jack is right and prices will continue to improve. New pipelines in your area are scheduled to come online in the next year or two. There is one that will run from your area to Philly and into DC. And as electric and transportation converts to gas, that should also help boost prices.

Thanks again and best of luck to you and yours.

Permalink Reply by Tico on December 1, 2012 at 11:38am
Well my royalty is 15per cent,, not an old lease, 2008,,the well was finished in Last. September I think and they got the pipeline to the pad in the spring, they started pumping I guess in July, and we just received the check two weeks ago, I live in nj and have property in bradford county, my neighbor who lives right next to the well didn't even know it was online, hopefully things will turn around , I read about the new pipelines to DC and Maryland, and hopefully the other unit we are involved in is a good producer,the thing is that unfortunately the gas companies have the upper hand and you really don't know what they are even doing, I called Chesapeake and they said the total volume on my check stub was total production of the well then I got another check from statoil and they had more volume production and Chesapeake knew nothing about it,,, even tho it's not nearly what we expected, it is money that we wouldn't have anyway,,
Permalink Reply by rmc on December 1, 2012 at 12:09pm
Thanks for sharing it seems so many people who finally get a well and started receiving royalties never come back to post on here.
Permalink Reply by Kathleen on December 1, 2012 at 1:50pm
I fully get the money we didn't have yesterday since that's now I feel about most of this but fair is fair. How is this not almost an automatic audit of CHK. If one check shows this amount of production while the other shows a lower number, to me this means something by CHK is off. I've read other plays that CHK is apart of and the same theme runs through them. CHK production numbers are lower, very high deductions, unexplained deductions.
Since this could ultimately be thousands of dollars lost over time I think I would call back again and ask to speak to maybe accounting? Definitely not just the rep who answers since I've called that number more than once about other issues and one time the rep didn't even know what a lateral was. :0)
I'm stuck with CHK and I wish they had a partner that had to also give me a check to try and keep CHK honest. I'm one of what seems like just a few leases still listed as only CHK as the lessor.
This has been a fun thread to read today so thanks Tico for posting.
Permalink Reply by Barbara on December 4, 2012 at 6:09am

These amounts, tico, are the same as mine....also bradford county, also nine acres, also from CHK and statoil, also 15%.  low enough that i hope the remaining 'drill, baby, drill' folks will realize that this is not the bonanza hyped during the last few years.  yes, money i did not have before, but certainly not enough to plan a life-style change in this lifetime.  

i posted last week that my checks from statoil appear every month; for two months i have had no checks from CHK.  this week i got checks from both companies for two hundred dollars less total than  for the four months that i had received both checks during the summer.....these followed a three month check from each in june.  so, i have two months with no CHK check at all during which statoil did send royalties. now to confront CHK with a 'why?'.  

i do find the accounting that CHK sends to be totally undecipherable as to what is indicated by each column and abbreviation.  i do see the large deduction tico mentions.  does anyone know how to make sense of the two pages of numbers that accompany a check?  

Permalink Reply by JK on December 4, 2012 at 7:57am

Barbara, we have not had a check from CHK in 5 months.

One reason is because they are changing our ownership from our dad into our names. Legally they are only allowed 90 days. I have called OK a number of times and finally got "the paperwork is done and being reviewed by the supervisor then it will be mailed to you for your signature. Then when you return it to us and if you get it to us befor the Dec. 21st check writing date your check will be in the check run." We sent our documents certified August 4th.

I was told it would take a few weeks and that was 3 weeks ago. We still don't have the papers. I have been told this is a ploy for CHK to not issue our checks until in January. It's all a bunch of crap.

Permalink Reply by Barbara on December 4, 2012 at 9:02am

you've got that right.  in the mean time, they have our money to do whatever with.  fun fun fun

good luck to you....it does all seem to come down to 'luck' with CHK.  and in the 'before' times, so many were saying that CHK was the best. maybe we were all falling for the landman's propaganda?

Permalink Reply by JK on December 4, 2012 at 9:20am

Barbara,

Years ago CHK was the best to deal with.

Nobody used landmen, at least we didn't.

CHK came to us directly.

Now, with CHK in a questional financial position there seems to always be a big question of trust in any thing they say.  Now it seems the landmen don't even mention CHK anymore.

 

Permalink Reply by James T Monyak on December 4, 2012 at 10:10am

Josie,

I have 50 NMA in Cleafield with Shell as the owner of the working interest.  I need to sell 10 acres out of the 50 acres.  Do you know anyone that wants to buy?  My daughter is starting college in a few months and I need the cash.  I am asking for what I paid for it back in 2010, $3500 per acre. This could be a good deal for someone willing to wait a couple of years for a well. 

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