First royalty check has me baffled

So most of you know me from the site and some know me in person. I have been an active participant in these forums on this site for more than 2 years, probably more.

I have read everything I can read about the entire industry, not just on this site but up and down the internet and print publications.

Some of you know that I signed what I was sure is a very good lease, with Antero. Antero traded our acreage to Eclipse who traded 12.5 acres to Chesapeake who put us in the McClain unit here in eastern Guernsey county Ohio.

  • Production began in May, we should have started receiving oil royalties in July, I should have called on it but didn't because it didn't matter to me so much when we got the money as it did that we got what was right.

Virtually everything I read about Chesapeake was extremely negative and I was working on auditing and legal representation for what I considered would be the inevitable litigation.

Boy was I wrong.

My statement is two pages, front only. It shows production, pricing, unit gross and lease gross. There is a deduction column which shows only zero's, as in no deductions for anything.

We received $744 an acre per month.

I am totally relieved that at least at this point things appear to be very fair and proper. I have spoken with other landowners on the same matter who are in my unit, they report the same satisfaction. One landowner told me the production figures match the states figures found on the ODNR web site and the other tells me that his royalty is within $5 an acre of mine.

I am still going to go to a professional for help in verifying that there isn't anything I am overlooking, I admit that I don't know what I don't know and it could adversely affect me.

I also suppose that the figures could be fudged from the actual as I am told the state doesn't verify the numbers a producer reports, however that scenario, in my opinion, would require a conspiracy with too many players to risk someone becoming upset and spilling the beans.

I have to say and gladly do that I was incorrect in my guess as to how we would be badly mistreated by our producer but you get that way when everyone is singing the same tune. I even had an attorney assure me that Chesapeake would abuse me in every way possible and there would be no realistic remedy for us to get it right from the producer.

I sincerely hope that this is a harbinger of better landowner/producer relations as it pertains to royalty payments.

Please do not feel that I am trying to hurt anyone who has had a different experience, I am only trying to share an honest assessment of our experience.

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Permalink Reply by bo boboski on October 5, 2016 at 12:55pm

$744. per month per acre seems low for 3 wells during the 1st few months of production.. At 20%,no deductions. Paying for NGLS. Maybe they are choked back? Maybe they are fudging the production #s ?, since they report on the "honor system". justsayin, not much you can do about it though, so don't worry,be happy!

Permalink Reply by David Allen Lilly on October 5, 2016 at 10:57pm

I really cannot do much more than I am doing. I am seeing an attorney later today. We also have arrangements made to do an audit on the well.

Chesapeake could be doing a lot of different things but I cannot verify any of them. As it stands going off the information I have everything adds up.

And Ohio is absolutely not doing us any favors with no auditing of production numbers. Just as bad is the state doesn't require the reporting of NGL's, they are included in the gas section same as the dry gas.

We will stay vigilant but for right now I have done all I can do and refuse to go on a conspiracy theory tour of this site.

Permalink Reply by Lynn mudder on October 6, 2016 at 1:03am
You are correct, you have worked hard to do everything correctly. It's about time the state steps up to be sure the companies are correctly reporting ALL products taken from wells.
Permalink Reply by David Allen Lilly on October 6, 2016 at 12:55pm

Bo Boboski,

I would have thought the numbers would be higher for the initial months of production just like you but I cannot possibly know with any degree of certainty.

As it stands until someone can tell me how to verify the actual production versus the statement production I have to go with what is on my statement.

The option is to pound out conspiracy theories and then chase them around every day and I wont do that.

As I stated earlier we (some of us in the unit) will be doing an audit at some point.

That is all I can do and I need to sleep at night.

Permalink Reply by Renee E. Dorsey on October 8, 2016 at 8:57am

Wow, David!  That is awesome!  I hope we have the same luck with XTO and our unit.    Poor Ron; he cannot slam the company then he goes after the CEO.   Those eeeeevil capitalists.    lol...

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