Division Orders and interest decimal verification

Can someone help me understand this email chain and question. Please don't laugh when you read that I Burden CHK.  I can't get a staight answer. 

 

From: Revenue Inquiry [mailto:revinquiry@chk.com]
Sent: Thursday, February 27, 2014 11:59 AM
To: 'Mike Antrim'
Subject: RE: Revenue Check question

 

Mike,

 

As a royalty owner in this well, you burden Chesapeake, Larchmont Resources LLC, Stat Oil, Anadarko and Mitsui E&P USA LLC . Stat Oil, Anadarko and Mitsui  are taking their gas in kind, which means they are not marketing with Chesapeake. So they are in charge of paying you on their portion of the gas. You will need to contact them for payments, if not received already.


We are just paying Chesapeake and Larchmont’s piece which is .00425851. If you take this portion .00425851 divided by the inflation factor .38402798 you will receive the payment decimal .01108906. We have to inflate the payment decimal since not everyone is marketing with Chesapeake, we are not in a 100% joint operating arrangement. We do this to insure everyone receives their proportionate share of the volumes produced.

 

Please let us know if you have any more questions.

 

Thank you,

Revenue Team

 

Attached is my Division order. 

 

I have called 3 days in a row.  Place on hold for over hour and no one picks up.  This is completely unacceptable………………… 

 

I need someone to call me. 

 

The first royalty check the payment decimal was exactly what was on the Division order.  The Acres matched.  See attached Division order  ACRES 535.936466  BPO net Acre 50.495298  APO unit int

.01177735

 

I have looked thru my records and 11-2010 the payment decimal dropped to .01108906 and my recent check has acres at 536.665434.

 

Anadarko and Statoil have never changed the entire time. owner decimal interest is .01177735

 

I need someone to contact me to discuss this

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Replies to This Discussion

Permalink Reply by wyalusing jim on March 1, 2014 at 1:45pm

most people can't afford an audit anyway.

the best way would be if everyone in a unit split the cost by acreage.

in my experience though, no one seems interested.

wj

Permalink Reply by INVICTUS on March 2, 2014 at 12:31am

Todd,

I do have audit rights in my lease. There is a fair chance that SOMEONE in your production unit will have audit rights. And true, many will not be able to afford the audit on their own.

My advice to them is" Do NOT be on your own!

Many joined together initially to form bargaining units (Groups) in order to get the signing bonus.

Many now should form similar groups for the coming years once their fractional interests are declared within "declared production units".

You know, once upon a time, neighbors would join together into what were known as "mutual fire insurance companies"

Today we recognize that concept simply as as insurance, where resources are commonly pooled for common interests.

Other forms of this concept are called "Cooperatives"

The point is, you either "hang together or you'll hang separately" !

Permalink Reply by INVICTUS on March 2, 2014 at 12:45am

You are contracted with CHK.

Depending on how your lease is written (this is absolutely key) will determine if their

statement to you concerning your fair share is correct.

"Burden" is an unfortunate, yet accurate word used to describe "Lease Burden" or, "Landowner Burden"; that portion of income that is expensed by the O/G company.

It does have a unfortunate tone to it.

Permalink Reply by RB on March 2, 2014 at 9:30am

You are a stakeholder in this whole production.  To be called a burden is despicable. Save that letter and report it to the CEO.  If they don't respond, go to Attorney General.  Quite showing of the attitude toward landowners, not to mention the disguised math calculations.Warrants taking action.  Chesapeake already has been caught trying to screw the landowner.

Permalink Reply by Philip Brutz on March 2, 2014 at 11:18am

Burden = overhead

http://en.wikipedia.org/wiki/Overhead_(business)

Permalink Reply by RB on March 2, 2014 at 11:29am

Haha, well the letter was not very well written.  Despite knowing what a burdening rate is, I interpreted the intent of the word to convey:

bur·den

1 [bur-dn] Show IPA

noun

1.
that which is carried; load: a horse's burden of rider and pack.
2.
that which is borne with difficulty; obligation; onus: the burden of leadership.
Permalink Reply by Deborah Kittner Johnson on March 2, 2014 at 2:30pm

Chesapeake is so poor at customer relations. Even though the term "burden" is part of the industry's language, it would behove them to put more thought behind their communications with landowners. Unbelievable.

Permalink Reply by James Foster on September 9, 2014 at 1:45pm

I dont know if this is true in Pa but in Ohio the transfer of a percentage ownership must be recorded at the recorders office. You could find out what percentage working interest each company has in the well. Royalty interest is the same as you have so those would not apply if you see those filed. For example DPS Penn in our area was given a royalty interest in all the wells in our group signing. Even though they did not get the leases per se they did help with the mass signing. They had been hired by Chesapeake to act as agents/landmen for them. The mass group signing took away a large number of landowners from dps penn so Chesapeake gave them a royalty percentage as payment. Total was an investor not working interest here too. You are looking for ownership/working interest percentages for the companies you mentioned. My uncle had an old well in the 70's and we found 30 pages of transfers some were working interest, one was when the well owner died, then his wife sold company and so on. You should be able to find all this info in the recorders office.

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