Chevron royalty payments are coming in......

Just received our statement yesterday for September 2014 and found that the 'price paid' is only $2.13. Just in April, the 'price paid' was $4.29. I notice that the production is down slightly but they continue to take 16% out in 'cost adjustment' (as expenses, I believe). Can anyone explain why the $2.13 when the Henry Hub hasn't wasn't below $3.40 in September. Thank you. Mary

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Permalink Reply by Jack Straw on December 9, 2014 at 4:35am

Natural Gas production from the Marcellus and Utica has resulted in a large current surplus of Natural Gas in PA, OH and WV.

The dynamics of supply/demand has resulted in regionally low prices for the Natural Gas at the oversupplied Hubs (such as the Leidy Hub in PA and TGP-Z4 Marcellus Hub in PA).

There are many Natural Gas Hubs spread across America, you can find the Day-Ahead Spot prices for various Hubs here: http://www.naturalgasintel.com/ICE

The published (and much quoted) Henry Hub price is for Natural Gas marketed at the Hub located in Henry, Louisiana (1500 miles from the people of the Marcellus and Utica). There is both a physical and a price disconnect between the Henry Hub and the Hubs servicing the Marcellus and Utica ......like in Real Estate, it is Location, Location, Location. Our local pricing sucks ... it is not really fair .... but it is a sad reality we are forced to live with. Only time, infrastructure and a better regional market can improve our situation.

JS 

Permalink Reply by Mary on December 9, 2014 at 9:56am

Wow Jack...I had no idea that there were that many Hubs and greatly appreciate your informative explanation. Mary

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