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Permalink Reply by lamar r king on February 3, 2014 at 1:02pm

before the last two months,i was actually hoping that statoil would by out my lease;currently they have about a 32% jv w/ chk appa.they take no deductions from me and they were always paying higher than chspk [per mcf]. suddenly,everything has changed with staty and they look like the little engine that couldn't! I hope this is only due to pipeline flow problems although I am afraid that may not be the problem at all.statoil has made a considerable amt of oil discoveries all around the world this past year and I personally believe they could care less about natgas anymore.

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Permalink Reply by Barbara on February 3, 2014 at 1:24pm

seems all gets more confusing as time passes.  today i finally DID get the chk check for january.with two thirds talem OUT.  still  no stat...will have to contact them tomorrow.

yes, until now the stat had always been less than chk, but at least without all the deductions.  so , as usual, we know not much at all.  except that big energy companies are just wonderful to deal with.  ............

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Permalink Reply by Toni on February 3, 2014 at 3:12pm

How would anyone know what it is all about?  Maybe Stat Oil has taken a page out of Chesapeake's practices.  We also received a statement from Stat Oil and no check (do I take this as an IOU?) and no check from Chesapeake for the past two months.  I had emailed them regarding this and their answer was that production costs had been so high????? My response seemed sensible, pointing out that the company that they so kindly sold 1/3 of my lease to which left them with 2/3 had sent me a check so based on simple math should they not have sent me a check also?  Apparently for our 31 acres in the unit we have only reached $2.65 in our account.  My response was then to ask if they were just ripping me off, still waiting a response.  At this point just thoroughly disgusted with the whole thing and lack of help and I do not know how they sleep at night.

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Permalink Reply by Sherre Boyanowski on February 3, 2014 at 4:48pm

Chesapeake's check came today. Production down - shut in due to no room in pipeline.  Deductions were 1/2 of the royalties. We do have the market enhancement clause.  Under each well they took out 4 deductions. They took out for compression, and 3 go to gathering. At the bottom of the page there are only 2 amounts for gathering. 2 of the gathering deductions are added together. November deductions were twice the amount of October's.They do give us back a few pennies for fuel.  Even that was way off. Only 6% of last month's.  They also changed the Deduct Code at the bottom of the statement. Before it was *2 for gathering and *9 for third party and UA-Line variance. This month it was coded Compression and Gathering and Fuel.

Unlike some of you, can I keep my Statoil 1099? It was only about .005% of what it should be. Do I really have to accept an amended one? LOL They didn't give me credit for Federal Tax withheld on the 1099, but I would forgo it if I can keep this 1099.

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Permalink Reply by lamar r king on February 4, 2014 at 2:34pm

folks,please tell your state congressmen and women we need hb 1684 to be passed this year.it would give all royalty owners a minimum 12.5 % AFTER DEUCTIONS ARE TAKEN OFF.I know politics can stink,but this bill is crucial to knock this crazy deductions circus off.PA NARO is heading up the drive to pass this bill.isnt it amazing that the gas co.s are trying to keep this bill from coming out of committee-were it would die!

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Permalink Reply by Ken Podlaszewski on February 6, 2014 at 5:50am

Thanks for the info on that bill.

Here is where you can find the language in that bill (link below).  It is very short and succinct:

 

http://www.legis.state.pa.us/cfdocs/billinfo/billinfo.cfm?syear=201...

 

It looks like a good bill. Folks with any current or future interest in having oil and gas leases fairly honored should consider contacting your elected officials about this bill.

 

It's just my opinion, but there may be some side affects to passing such a bill -

 

It may become less economically feasible for companies to extract and sell gas at or below current market prices. There may be cases of low market value where REAL processing costs combined with the 12.5 % minimum royalty payments become too high and the energy companies may not be able to get enough (or even any) profit. Leases could get shut in.  I suspect that this would eventually drive up gas prices though.

 

It also may become the norm that no matter what the royalty percentage in a lease is, the energy companies will see to it that deductions will always be such that no more than 12.5% royalty ever gets paid. Just my pessimistic side talking here though. My optimistic side says that most companies want to do the right (and especially not illegal) thing and I hope that misrepresenting deductions to minimize royalties is currently illegal with appropriate consequences where it is being done.

 

It's hard to say what energy companies will do who have overextended their investments in leasing and drilling  and who are trying recover costs even though the current market value does not support it. What happens to leases if such a company goes into bankruptcy?

 

On the plus side, this may increase competition on the production costs side of things and companies may have to find ways to become more efficient and reduce their production costs.

 

One thing for sure, when companies can't turn enough profit at current market values (or when they simply want to increase an already adequate profit margin) they should not be able to rip off the lessors by reducing royalty payments with artificially inflated production cost deductions.

BTW - don't forget how much excessive regulation and oversight adds to processing costs. While I fully agree that sufficient regulation is necessary for a number of things, including environmental protection, FINANCIAL/BOOKKEEPING PRACTICES, etc.,  remember that going overboard on regulation can greatly increase REAL production costs. If the big energy companies cannot make money selling your gas, your royalties will be zero. There are those who want reasonable regulation on the industry and those who want regulation excessive enough to shut it down. In my humble opinion it does not look like this bill is one of the latter.

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Permalink Reply by lamar r king on February 6, 2014 at 9:31am

if chesepeake cant make it when they have to pay 12.5% royalty,then they need to sell to someone who can such as chief,cabot,shell,Anadarko,eog,southwestern,enervest,eqt,xto,etc.[youall get the point]!

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Permalink Reply by bobt on February 6, 2014 at 4:25am

Sherre; 

yes the email i received from chk was in response to an e-mail that i sent to them 

bobt

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Permalink Reply by RB on February 5, 2014 at 1:54pm

These practices are just awful!

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Permalink Reply by Robert Davis on February 6, 2014 at 5:38am

Does anyone have a royalty issue with EQT?

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Permalink Reply by Kelly Camp on February 18, 2014 at 9:10am

Hi, Robert, I just sent you a friend request - sorry that it sounds like you are having royalty issues with EQT.  Please accept my request and I will send you my contact info.  I run the Land Admin group at EQT and will be glad to help you resolve the issue.

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Permalink Reply by Mary Ann Schram on February 6, 2014 at 7:01am

We got them all but Mitsui, some mix up in accounting, should get later this month.  Statoil messed up a lot of 1099's so they have to be reissued, maybe that's why you didn't get one.  Make a phone call and find out.  Some other people aren't getting checks because of some decimal changes and they are taking money back.  That includes Chesapeake and Statoil for certain wells in the area.  That's all I know.  Hope that helps, like I said, phone calls may help.

 

 

 

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