Gas prices used by Rice Energy

Rice Energy gives us a gas price below the hedge price they get themselves.  But in their latest investor's report, they list both their hedge price and the unhedged price.  This report says that the unhedged price was $2.32/mcf for the 3rd Q of 2015.  So, I looked up what they paid us for July, August and September of 2015.  The 3 months prices were $2.21, $2.05, and $2.02 for an average quarterly price of $2.09.  Has anyone else seen this type of discrepancy in their payments?  We are in Belmont County Ohio. 

To make matters worse, they then adjust our payments by "post production costs" which reduces our effective price even more. 

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Permalink Reply by KAS on February 1, 2016 at 6:57am

I noticed the same.  Our well is co-owned with Gulfport and there is also a discrepancy between what they each pay for their portion-- although you would think it was in the same pipleine they would be close.  Gulfports really tanked for this months payment down to $1.31 and Rice didn't send us a check for January yet so I am waiting to see what they paid for this month in comparison.  They both 'readjusted' our account in December and changed the deductions they were taking out - not to our advantage of course. 

Permalink Reply by Jeff Kerr on February 2, 2016 at 11:02am

my last check from Rice was for .79 per mmcf we are in shut in now as gas is selling so cheap.  they do not want to give it away but looks as if they gave mine away

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 1, 2016 at 7:50am

O&G Companies are known for shorting landowner royalties, which is also known as theft in most parts of our society. This is expected of O&G Companies since no one has ever filed Criminal Charges, at least not to date.

Take a look at the attached Hope Christian Fellowship vs Chesapeake Class Action Complaint. Your gas underpayment is more than likely the tip of the iceberg. Where are your NGL royalties?

If you would like to recover your losses, then file a Class Action Suit with the lawyer who wrote the attached.

It will help you and all of your neighbors stop the theft plus recover 3 times their losses due to RICO Activity.

Attachments:
Permalink Reply by Bluflame on February 2, 2016 at 12:05am
The E&P's are not obligated to pay the hedged price. In the long run, that probably is an advantage to royalty owners as the hedged price is often below the actual price they receive. Hedging is a "roll the dice" bet that doesn't always "win". For the E&P's, it protects them on the downside, but limits the upside. You would be just as upset if they paid you their hedged price when in fact the actual price is higher. That is definitely not the case right now.
Permalink Reply by K2 on February 3, 2016 at 12:05am

Bluflame,

My issue was not with the hedged price.  It is with the discrepancy between the non-hedged price of gas that Rice claims in their investor's report and the price they are using to calculate our royalties.

Permalink Reply by Leo S on February 4, 2016 at 3:19am

I absolutely want the downside protection.  It is my belief the hedge price is the true price that should be used for calculating royalties, even if market prices are higher than the hedge prices.  If market values rise, the newer hedge contract values will also rise.  But a downside protection is a requirement to me.  The true market value really is the hedge contracts, nothing else, and they hedge contracts should be used in calculating royalties

Permalink Reply by bungalow_steve on February 2, 2016 at 4:26am

If you look at the calculations they use the average basis impact (38 cents) to get to the 2.32/mcf, you have to apply your basis differential for where you live.

 

Even after doing that, the basis impact is just an average of all the wells in your area, each well is slightly different, so you can't really come to any conclusions with these general slide packages.

Permalink Reply by DESJR on February 2, 2016 at 11:53am

Please define the term "local basis differential" for the not so smart side of the room please.

Permalink Reply by K2 on February 2, 2016 at 2:22pm

Desjr,

I believe that the basis differential is the difference between the benchmark price of gas and the spot price in a given area.

Permalink Reply by Sylvester Deal on February 2, 2016 at 12:42pm

Here are a couple sites, one complicated, NGI, and the other simple but limited to two outlets in east OH.

http://www.naturalgasintel.com/data/data_products/daily?region_id=n...

http://www.gatherco.com/documents/PRICING.pdf

Permalink Reply by K2 on February 3, 2016 at 3:20am

Thanks Sylvester for the links.  I learned a lot at the NGI site.  It would appear that gas prices were down quite a bit by the end of 2015.  Since our royalty payments lag by several months, we should expect that our payments for November and December will be down.  The projections for 2016 and 2017 seem to be better as the differential between Henry Hub and the Northeast appear to be getting smaller due to new pipeline capacity.  The US Energy Information Administration is also projecting that gas demand will increase in 2016 and 2017 causing prices to go up.  We can only hope.  Here is the link to the EIA site which has lots of interesting information:

https://www.eia.gov/todayinenergy/index.cfm?tg=natural%20gas

Permalink Reply by DONNA M SELLERS on February 3, 2016 at 2:23am

My  well with Rice is in PA. Greene County, my last price was .74cents. I emailed them yesterday asking a lot of questions. Waiting a reply.

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