Royalty for Natural Gas Liquids

I just started receiving royalty payments for a mineral lease in Wetzel County, West Virginia. I was paid $2.80 for the gas on my September royalty check. Wetzel County is supposed to be rich in NGLs. My lease is an old "flat rate" lease, written in 1900. Are gas companies supposed to compensate the mineral holder for NGLs?  $2.80 seems low?

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Permalink Reply by Nancy Mosley on November 2, 2014 at 2:16pm

Does your check stub show details? It could be that the company is deducting costs for transportation (which it should not do but some do until they are caught). Is this a new well? Are you getting the flat rate payment for the old well?

Permalink Reply by Marcus Huey on November 2, 2014 at 3:17pm
This is a new Marcellus well. Our check stub shows $2.80 is used to calculate our royalty payment for our NG. THEN 15% of our check is taken for "Deducts". So, I think we are getting a low price for our NG AND the gas company is taking deductions...a double wammy.
Permalink Reply by Nancy Mosley on November 2, 2014 at 3:59pm

If you don't mind saying, which company?

And, there are some companies claiming that the NG liquids are waste products and just paying you for the methane, the dry gas.

A lot of ways to keep money for themselves.

Permalink Reply by Marcus Huey on November 2, 2014 at 6:47pm

EQT.

I have asked for a list of what they are claiming to be "Deducts", but get no response.

I have asked what gives them the right to take deductions.  They claim they are entitled to take deductions because our lease is a "flat lease". Our lease, written in 1900, clearly states "1/8th, no costs".

Permalink Reply by bo boboski on November 2, 2014 at 10:57pm

see an attorney!!!!

Permalink Reply by The Hiker on November 3, 2014 at 3:08am

I am curious about a lease written in 1900 that the company claims is still valid.  Have they been drilling and producing continuously for 114 years?  Serious doubts there.  Seems like a trip to the oil/gas attorney is way overdue, and I would be trying to break the lease instead of fighting over deductions.    

Permalink Reply by Marcus Huey on November 3, 2014 at 3:48am

Thank you all for your responses!

I did have a review done on the lease before signing the Pooling Addendum...it appears that the lease has been "Held By Production" since 1900.

I will be contacting an attorney.

It appears obvious that the gas company is not entitled to deductions.

What is less clear is how Natural Gas Liquids are handled.  Should I be getting paid anything for my NGLs? Right now I am receiving zero dollars for the NGLs being removed from my mineral lease. My research shows that the Wetzel County area is very rich in liquids.

And, the market price of natural gas has been between $3.50 - $4.00 for many months. I am receiving $2.80 for my gas. Is this normal for northwest West Virginia, eastern Ohio and southeast Pennsylvania? I would be very helpful if I knew what others are being paid for their gas BEFORE deductions are taken out.

Thank you all...we must stick together or the oil & gas companies will take advantage of us!

Permalink Reply by Nancy Mosley on November 3, 2014 at 6:03am

I have 3 wells on an older lease where the current company pays for the occasional oil, and monthly gas. They list the BTU content of the gas. As I understand it, the basic gas is 1.000 and any numbers higher than this include the natural gas liquids values but not separated out (oversimplified version). This is the only company that does this (of those that pay me). Possibly the company paying Marcus is not listing this figure but paying on a lump sum, and has a bad sales contract so not getting much. Or is charging an exorbitant amount for "expenses" which should not happen. Anyway, a good attorney should be able to help here. I agree that we all need to stick together, and notify our WV state representatives and senators, even if we live out of the county where our minerals are.

Permalink Reply by Marcus Huey on November 3, 2014 at 6:38am

Yes, Nancy, that is exactly how I was expecting to get paid for my NGLs...by getting an increase for my gas over the market rate...the more the liquids the higher the BTU rating and the more money I would receive over the base market price of NG.  Contrary to this, I am receiving below market rate for my gas, not a bump up because of the NGL content. And, on top of that, the gas company is taking 15% for Deductions, which my lease specifically prohibits...a real rip off.  Let's stick together and hope we get some legislators elected who will look out for the mineral owners. 

Permalink Reply by Dexter Green on November 3, 2014 at 6:56am

"And, the market price of natural gas has been between $3.50 - $4.00 for many months. I am receiving $2.80 for my gas. Is this normal for northwest West Virginia, eastern Ohio and southeast Pennsylvania?"

Yes.  Currently differentials are between $1-1.50 per MCF, depending on the agreements in place.  Welcome to the gas glut.

Permalink Reply by Marcus Huey on November 3, 2014 at 7:13am

Thanks Dexter...I am on the west coast, so getting the big picture from those informed is very helpful...much appreciated.  Hopefully the recent weather will give us a boast (easy for me to say from Arizona, sorry ;  )

Permalink Reply by Dexter Green on November 3, 2014 at 7:30am

Unfortunately you should expect lower prices until at least early 2016, barring another brutal winter of polar vortices.  The oversupply is starting to become a serious issue.

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