Replies to This Discussion

Permalink Reply by 0ym9x5ag7ury2 on December 30, 2015 at 2:47pm

Hello,

     It's lawyer time. You know these O&G Companies are short changing landowner royalties, its a tradition.

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Permalink Reply by David Allen Lilly on December 31, 2015 at 12:36am

We just were informed of this happening with Eclipse Resources here in Ohio, although I haven't spoke with anyone to who it is happening.

Do the leases allow for post-production costs as your comment suggests and does your lease allow them retroactive deductions ?

We don't like these things for sure, and I hate to see it happening but if the leases signed allow it there is nothing that can be done and it is hard to blame the producers for taking what is theirs.

You wouldn't voluntarily give back a portion of your royalty to them, and if you noticed an error that was in their favor you would seek the money in question if it  was rightfully yours.

Sadly, most of this seems to be an effort to stay solvent, the next step might be the ugliest of them all, and is one I fear the most for those receiving royalties.

Good luck and please keep us posted.

I promise you all that if we experience these same things we will pursue legal action and I will keep you all informed in an effort to communicate what are the most effective strategies.

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Permalink Reply by Gas Boy on December 31, 2015 at 3:48am

David, it is an old boiler plate lease from shallow well drilling - 12 1/2% royalty.  No language regarding deductions, so here in PA companies are able to deduct post-production costs - ok with me.  But the "retroactive deductions" showing up on the statements is a new one.  My guess is that Range came up with a clever way to soak the lessors out of more money to pay for projects and/or "past sins" - i.e. lawsuits.  I wanted to post a blog on this site to see if any other Range lessors have experienced this before going through the painful task of dealing with Range.  Then again, it just may a legitimate accounting error.

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Permalink Reply by 0ym9x5ag7ury2 on January 4, 2016 at 7:00am

David,

    Keep my lawyer in mind, he is thorough in identifying all thefts in progress. See the Hope Christian Fellowship Complaint.

The intent in my posts is to ensure the landowners in the Appalachian Basin receive the best representation that can be found, and the Producer Theft is brought to an end Basin Wide.

The only money I'm interested in will come with a Fair Royalty Payment for the well products taken from my property, as it should be.

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Permalink Reply by JamesG on January 4, 2016 at 6:34am

I can only speak from my experience over the last 2 years and multiple wells in Washington County.  My monthly receipts are often 30 or more pages.  No I am not rich, but I have had the opportunity to closely examine Range receipts.  I have also examined several other landowner receipts in Washington county.

The figures on current royalty payments to landowners are often updated for prior months of payments. This is why the receipts are so long.  What happens is on the current receipt is the previous payment from what maybe months ago is completely subtracted out of the current receipt and then added back in with the corrected amount.  The numbers maybe large but the net is usually very small.  It is often in favor of the landowner.  Last month I picked up about 1% of the total royalty payment for the month due to corrections in prior months. The 1% is a large amount compared to what normally happens.

I speculate many of the corrections are due to adjustments caused by finalizing charges of Mark West (the mid stream company) to Range for gathering and processing charges.  Range likely reviews charges of Mark West since they are also charged.  As evidenced by my receipts, some of this benefit has been passed on.

I think a review of the entire history of the payments to you may be helpful.  It takes times to do ( there are thousands of entries) but, if like in my case, you will find probably nothing unusual that results in large changes in royalty for no apparent reason. 

But I do carefully examine the receipts each month.  As they say, trust but verify.  This is the only way to run a business.  If you are a royalty owner, you are in business the minute you sign the lease.  Nobody is going to give you money because they feel sorry for you.  The operator has a responsibility to the company owners (maybe shareholders) to make as much money as possible.  Where the problem is in PA some operators are scrambling to exploit the landowner as much as possible if they can get away with it.  This forces other operators, that may not be initially inclined to do so, to adopt the same practices.  The problem is the PA government is more than willing to allow these practices to play out in court rather than have clear regulations that must be followed.  As an example, the PA government still cannot define what a royalty is so that the minimum royalty law is essentially void and provides no protection to the landowner.  But they have no problem in taxing royalty.  In that case I guess they know what royalty means.

 

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Permalink Reply by 0ym9x5ag7ury2 on January 4, 2016 at 7:12am

James,

     If you want to know for sure that you are being treated fairly by your producer, contact the last lawyer on the last page of the Hope Christian Fellowship Complaint attached.

I'm betting you are being shorted even though you are verifying, and you may be misguiding the landowners in your area with your posts.

Rob knows all of the tricks and will advise you on whether a Complaint is warranted. He won't charge you for calling him.

The International Companies will pay fairly, but the Domestic Companies are aware of the 100 Plus Years of the National tradition of short changing landowner Royalties.

Prove me wrong.

Attachments:

• OHIO AMENDED COMPLAINT - HOPE CHRISTIAN FELLOWSHIP v. CHESAPEAKE ENERGY CORPORATION (Autosaved).pdf, 2.4 MB

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Permalink Reply by JamesG on January 4, 2016 at 9:10am

I take issue with your statement.  My comments pertain only to Range in SW Pennsylvania.  My statements only address the original question concerning that deductions are changed/added from prior royalty receipts.  These are statement of facts that I have decided to share.  Whether the actual prices and deductions on the receipt are correct is a different question.  But the arithmetic is very likely correct.  Most insidious abuses, if they exist, will not be evident by simply reading the receipt.  

The call to get a lawyer and mention a law suit every time a landowner does not understand an accounting on a receipt only serves to enrich the lawyer/accountant.  Systematic abuses, if they exist,  are very expensive to determine and remedy.  Again, this is a statement of fact.

The Lawsuit you reference is for alleged practices of Chesapeake in Ohio not Range in Pennsylvania. However, the history of Chesapeake settlements in PA show, it is the lawyers that make the windfall.  Landowners were forced into settlements that pay very little unless they opted out even without notification.  The operators are not the only source of exploitation of the naive landowner. 

That was my last point is the regulations should be clear in PA that legal actions and writing laws in the courts are not necessary.  Laws should not be written in courts and decided by judges with varying backgrounds / opinions / intelligence and agendas.  This is not rocket science.  But the current situation is a windfall for lawyers that probably paid too much for their education.  Sorry, to the few good and honest lawyers I know, mine included.

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Permalink Reply by 0ym9x5ag7ury2 on January 5, 2016 at 5:05am

A review of O&G company performance in paying a fair royalty to landowners in the US will show that your observation of fairness in your royatly payments is Rare.

I'm betting you have missed how your producer is short changing you.

The lawyer I mentioned could look at your Royalty Statement and tell you in minutes if you are being treated fairly. You have nothing to lose and won't pay for his time

You can take issue with my suggestions, but accepting what you are being given is what has led up to this sad state of affairs in the US today.

The lawyer I mentioned works in OH, PA, & WV.

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Permalink Reply by Gas Boy on January 5, 2016 at 11:00am

Thank you Ron.  I will check into this!

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Permalink Reply by Gas Boy on January 4, 2016 at 11:32am

James, thank you for your input!  My next step is to go over all the royalty statements from day one.  As you stated, there are thousands of entries and this will take time - definitely days and/or weeks to sort through and finally see the picture of what has been transpiring.  You brought up a very good point - the adjustments may be due to charges being finalized by MarkWest to Range.  If that is the case, a pattern will emerge while going through the statements from earliest to latest.  A puzzle, but one that can be deciphered with time.

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