Gulfport Deductions from the Royalty Payments

Gulfport initially did not take any deductions from our royalties but in November they informed us that they were going to take out "post production costs that enhance the value of the marketable gas".  They did so retroactively and stopped making royalty payments all together presumably to recover these deductions from earlier months.  When payments finally resumed, initial deductions amounted to about 11% of the monthly royalty.  But then in the payment for October's production, two of the laterals jumped to 22% while the other one remained at 11% of the royalty.  Now in for the November payment, two laterals had deductions of 39% and the third was at 22% of the royalty.  If they keep enhancing the value of my gas this way, my royalties may disappear entirely.  Is anyone else seeing this from Gulfport? 

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Permalink Reply by G.H. on February 4, 2016 at 6:55am

I can't speak to the percentages being taken, but Eclipse recently did something similar.  Said they "reexamined" the lease and realized that they had not been taking certain deductions that are allowed under the lease.  They are taking the deductions retroactively and I will not receive royalties until my account is out of the negative.  Seems like a load of crap.  I think they are really pushing the limits on what they can deduct because times are hard.

Permalink Reply by bo boboski on February 4, 2016 at 10:14am

Hey, why not, Chesapeake,and Eclipse is getting away with it,so yea. Until some gubment official grows some balls, all the drillers will start doing it!

Permalink Reply by K2 on February 4, 2016 at 10:59am

Well Bo Bo, I'm surprised by the lack of responses on this issue.  There is a lot of apathy within the landholders.  If we don't speak up, why should the government care?  Why should the gas companies stop finding ways of reducing our payments?  Unless people are willing to say this isn't right and get together to question the problems, we will continue to see our property taken from us for less than it is worth.  Really sad.  

Permalink Reply by bo boboski on February 4, 2016 at 12:03pm

There has been plenty of complaints in the last year,or two, but to who? If our elected officials don't care,then vote someone else in there. Seems like individuals have a snowballs chance in hell of doing something about it,so its either join up in a class action lawsuit, or vote out elected officials doing nothing about is,thats the only two options. Type in the name..Ron Hale on this site. You'll see how widespread it is, and what a guy can do,if anything.

Permalink Reply by Jason on February 4, 2016 at 11:50am
There have been MANY complaining of this very issue. (I'm leased, not drilled).

You might want to search for some. Or search Ron Hale's name. He has his own lawsuit against CHK for theft of NGLs. Best of luck
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 4, 2016 at 12:59pm

Jason,

     Thanks for the recommendation.

Always remember: If they're Drillin They're Stealin.

Permalink Reply by Jason on February 4, 2016 at 1:17pm
My lease is up this year Ron.

After reading all of these messages, I almost don't want to sign away 80 acres to ANY of them. I'd rather it stay in the ground then stolen away while they hand me what the accountants feel like paying out.
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 4, 2016 at 12:54pm

I may sound like a broken record, but, Domestic Oil and Gas companies have traditionally short changed landowners in the US. It's what they do.

Chesapeake is using every method of theft you can imagine, so the other producers are getting greedier as time goes on.

Compare notes & complain, then file a lawsuit against your producer.

Contact the last Lawyer in the following complaint. The theft they are committing is very easy to see when you have an expert. If you are in Ohio this is probably a RICO issue. You recover 3 times your losses.

Good Luck, and let me know if you need help.  Ron Hale

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Permalink Reply by boop on February 4, 2016 at 3:37pm
Sounds like it is time to lawyer up.
Permalink Reply by Mark Y on February 4, 2016 at 9:07pm

The same has happened to me. I haven't gotten a check for 3 months. I do not have that much acreage in the well, but they still claim I am 7,000 dollars in the red. You call Gulfport and the reply is did you get the letter? Then you ask what did the well produce so that I know and can keep track of the so called amount that you are deducting. What was the amount in the beginning? So many questions,  but they claim the answer is in the letter. I still read the letter daily, tried reading between the lines, tried some tricks to see if something was added with invisible ink, and I still can not find the answer in the letter. Oh, there is one thing I haven't tried, holding the letter up in a mirror and reading it backwards, I will try that today, hopefully the answer will be revealed.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 5, 2016 at 3:18pm

Bruce Buck and I called Chesapeake Energy several times early in the production of Buck Well 1H to find out what all the negative numbers were. They said these were "Adjustments" and could barely keep from laughing. When you asked them to explain the Adjustments, they couldn't.

I wrote Chesapeake the letter required by the ALOV and most other leases. O&G companies know that when they don't follow the lease landowners will ask questions but still not read their leases.

O&G companies write leases with no intention of following them, so they add a paragraph that says if they don't follow the lease, You the landowner must write them a letter and describe what it is they a violating in the lease, send the letter to the given address, Certified Mail with Return Receipt requested. They then have a time period in which they supposedly will fix their improper actions or explain them away, or not.

So I found 9 violations of my lease and placed their actions & inactions next to each paragraph they were in violation of, and sent it Certified mail, return receipt requested.

Now what I got back was nothing less than a miracle. The Chesapeake Spreadsheet of how they were pencil whipping our No Deduction, Arms Length Sale at Fair Market Value, Gross Royalty of 17.5% into a $56 a month per acre Fraudulent Royalty (also known as Royalty Rationing) payment we were getting. The Royalty Statements to this day show ZERO Deductions, while their spreadsheet shows 3 columns of deductions and various other means of committing theft. We are now hovering around $15 per acre per month, our ownership numbers are never correct, and what was a payment by Total E&P coded as TB (undefined on the statement) is now ZERO.

The spreadsheet is in the Hope Christian Fellowship vs Chesapeake Complaint. So Chesapeake is selling well products to themselves below fair market value, overcharging us to process the natural gas from our NGLs along with a list of other thefts or Adjustments.

Landowners watch the trains roll through the hills of Carroll County made up of tank cars that were never seen before the Kensington Processing plant opened for business, taking our NGL Ethane & Propane off to a market where it pays a premium price, while Ohioans cannot show one positive dollar royalty paid for a gallon of NGLs. The gov & atty gnl are playing See No Evil, Hear No Evil, while their fortunes are becoming hard to hide.

Permalink Reply by Jason on February 5, 2016 at 3:56pm
Unreal.

Just reading this makes me think there was at least ONE employee inside the Chk corporate office with a guilty conscience to send that deduction sheet to you.

Or am I being too naive????

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