Payment of royalties

I have 20 acres in a well that has been producing since August 6th.  The well is in Stark County,Ohio.  My lease states that royalties will be paid 90 days after production starts.  It is January 22 and I have not seen a check. What should I do?

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Permalink Reply by Berk on January 26, 2013 at 2:56am

I would assume he is talking Crawford County, Oh. Since he is talking Chesapeake and oil production.

Permalink Reply by james on January 25, 2013 at 7:47am

Marcellus, utica, deep, shallow, ???? The well type shouldnt matter, if you are in a well unit that is making almost $40,000 a month and your getting less then $400 on 80 acres(dont know how much is in unit) then I think the landowner is getting ripped off, I have had shallow wells grossing alot less then this that I have received alot more money from. I know nothing about Kastle Resources but know they arent very helpful when you call in and start asking questions? We never received anything from them since we bought the property almost 1 1/2 years ago, no lease money, no letter about a well, nothing????????

Permalink Reply by Big D on January 25, 2013 at 8:52am

I may be off target with this post, but I want to throw this out there.  If the well makes $40K a month, ROI to build the well will be what, 100 years?  Must not be a horizontal shale well?  It blows my mind why nobody knows how much the royalty payments are.  I wish someone would post a statement on here.  No doubt there are many different variables and factors, such as wet gas, which shale layer is hit, length of lateral, etc, and so on.  I seen in Ohio where a drilling unit for one lateral is around 160 acres.  That's what, $3,xxx to $4,xxx per acre, per month?  Plug in the output data, and that's what ya get.  I hear the guys in north central PA (near Bradford) where my hunting cabin is...they are getting like $300 acre/ month, but they are in dry crappy Marcellus region. Another huge variable is some people are locked in at a whopping 12.5% royalty (old leases) and others got the new 20%.  Thats a big difference.  I don't know the answer but just wanted to add my input!  Stark county is Utica.  There are only like 5 Marcellus wells drilled in Ohio to date, because they are not good.  I'm from Mahoning County Ohio and a guy form Hilcorp told me they plan on poking holes in Marcellus, Utica, Point Pleasant, and Black River from the same pad.  What would the royalties look like for that unit?  huge.  Be nice if someone from Carroll or Columbiana County would post a royalty payment statement (perhaps someone already has)?  :) 

Permalink Reply by bo boboski on January 26, 2013 at 12:01am

Dont know exactly why; but people seem to clam up when asked how much their royalty checks are.It's like a BIG secret. Maybe they are dissapointed that they are'nt getting rich on it, or matbe it's like "nobodies business", something like asking how much they make at their jobs? Maybe,if they are getting rich,they dont want theives to know? In March,when the well production reports are released, one can check their acreage in the unit,then do the math to find out anyway!  Be nice to know,though, what deductions are being taken out. Wont know if they are getting 12.5% or 20%. Alot of people are very secretive about their lives,but most of their history is easily accessible on the web! You'd be surprised.

Permalink Reply by 0llbnp780fs53 on January 26, 2013 at 10:39pm

The well type shouldnt matter, if you are in a well unit that is making almost $40,000 a month and your getting less then $400 on 80 acres(dont know how much is in unit) then I think the landowner is getting ripped off

Actually, there is no mention of the size of the drilling unit.  If the drilling unit includes thousands of acres (like they used one well to "hold by production" everything even remotely close) then the numbers could be legitimate.  Some leases limit pooling to only connected tracts of land and only a certain number of acres... but not all leases do that and I don't think there are many states who set an upper limit on a drilling unit size... so it is possible that a single well is being used to hold an entire township of leases as "in production".

Permalink Reply by cmorris on January 25, 2013 at 9:35am

Hope this helps!  A well is either drilled on a "unit" basis or a "lease" basis.  Whatever the amount of acres is in the "unit" or "lease", becomes one of the factors for which your "net decimal interest" is figured. The other factor is, the royalty in your lease.  For example:  If you own 40 acres in a 640 acre unit and you have a 3/16 royalty in your lease, this would be the calculation:  40/640 x .1875 = your net decimal interest.  Once you derive your net decimal interest, multiply the amount of production x the gas/oil price, and that would be the amount of your revenue for the month.  


Also James, if the land was under lease when you bought the property, you wouldn't receive any bonus money.  Your best bet is to check the county records for the lease and see what the terms were.

 

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on January 25, 2013 at 12:23pm

He's given you good information. '640 acre unit' correct (whoever mentioned '1280' must have DOUBLED THAT...no problem). IF the well is STILL 'in your dad's name'...you need to find THAT out - and if so...get them the needed information to get this straightened out.

Do you have ANY of your dad's monthly Royalty stubs - this will list 'production amount' as well as WHAT product was being given royalties on (usually #1 for gas, #2 for oil) AND sometime 'OIL' is 'held' until enough builds it up to make it worthwhile for 'transferring'. IF you do...you can then GRAPH how things are going. 

GO TO THE COURTHOUSE - there in 'land & records' (if uncertain - ask...they'll help you out!). give them your 'map #' (should be on your 'tax bill') - and have someone help you to look it up. You'll see ALL 'legal transactions' that have been filed for your property.Get Copies (less than a buck a sheet!). You will be able to then see IF the 'lease is STiLL in Kastle's name -OR- been sold or traded to SOMEONE ELSE. (your 'royalty check may STILL HAVE 'Kastle's' name on the CHECK, BUT 'Kastle' may NOW be 'under' a DIFFERENT COMPANY's name. YOU'LL BE ABLE TO SEE THIS at the courthouse WHEN you go.

ALSO - know royalty check is always for PREVIOUS TWO MONTH'S production. It is now January...so the check you would get would be for 'Nov. 2012 production'. SEEMS complicated, but pretty simple - for the most part. AND you DO know how LOW gas prices are now...THAT affects things too. PLUS $/mcf may depend on whether your LEASE stipulates 'at the wellhead' price for royalties...OR your RoYALTY amount  MAY end up having 'production fees', transfer fees, refining fees, and God knows WHAT other fees (THIS is where they basically have things REALLY RIGGED in 'their favor'!) affecting the $$$ YOUR 'CUT' is (what's 'left').

With that said, I think you're loaded for bear now - go do your homework & God speed. Condolences to you on your father's passing.... He loved you & he did HIS BEST! Don't be too upset. IF it's ANY consolation for your MIND...you said 'five years ago'. NOBODY was 'in the know' on this Marcellus & Utica formation stuff in this area too much - MAYBE 'snipets'. Your dad didn't read the WSJ, IBD, Barrons, +...so HOW would he know?...be GLAD you did what he did. You'll be fine. Take each day one step at a time - it will all be fine.

As one light lights another, nor grow less...so nobleness enkindles nobleness. Peace. Shalom.

Permalink Reply by Billy Park Whyde on January 25, 2013 at 6:38pm

My Dad in the late 1950 turned down a chance to buy acreage at $500/acre. He said to my mom dang it no one is ever going to drive this far out into the country to buy produce. He was partially right, they now drive out to the the "country" to shop at the strip mall located upon that property. 

Two days before he passed away sitting in a wheel chair in back of my pick up truck with this view he said shep ya did right. I chose another route not money in the bank as a investment but rather land to pass on.

  If I was to go to the grave yard with a lease check for $6k/acre it would be the first direct link between O&G and a earth quake as he rolled!

Photo: Pond 2011

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on January 26, 2013 at 11:42pm

My respect to YOU and your FAMILY - you 'stuck tight & DID IT RIGHT'! THIS is EXACTLY what I'm TRYING to help REAL AMERICAN PEOPLE learn for themselves & KNOW.

Lovely place, brings PEACE to my HEART to just be blessed to get to SEE IT. THIS IS AMERICA! IT IS where this g&o 'business' ALL BEGAN...and 'people' NEED to 'get that'. It's NOT 'overly complex'...in fact, it's rather STRAIGHTFORWARD & SIMPLE, isn't it? - yes, "SHEP YA DID RIGHT." Sounds like he 'died with his boots on'...like REAL MEN want to. Honorable. Nothing more needs said. I close with this...

'IF' by Rudyard Kipling If you can keep your head about you,  when ALL about you, are loosing theirs and 'blaming it on you'...IF you can keep your head when all men doubt you - AND MAKE ALLOWANCE for their doubting too. IF you can...IF,If,if..

The man, your daddy did it RIGHT. GOOD man.My father was GRAND, too! MY best friend. God bless you...I know you probably KNOW that poem, too...IF!

As one light lights another, nor grows less - so nobleness enkindles nobleness. Peace. (thanks again, for sharing this picture...THIS is what's it's all about & the MEMORIES that are carried with it!

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