Anyone familiar with Gas and Oil Marketing Charges. Anyone ever heard of charging a marketing fee when there is no production? Seems like a scam to me. Any advice would be helpful.
Thanks
Post a detailed question to get a response. Do you own a royalty interest or working interest? Look at production month on the check. Is the charge for a current production month, such as May 2020, or for a back-charge for past production months such as in 2019 and 2018? If for prior months, look at earlier check stubs for prior months to see if there were any charges. Also, post county, state, operator and well name for more help.
Confused. How can you be charged a fee for anything when there is no production? Who did this “fee” come from?
That is my point. How can I be charged marketing fees when there is no production? A new company has taken over marketing both oil and gas in the past 8 months on some my RI and WI interests. Before they took over there was a nice monthly return, now it has dwindled to near nothing. I have called the company and they are basically refusing to speak with me blaming covid 19 for communication failures. I just thought I would ask the question before I hire an attorney to get some answers. And to TennisDaze. I asked a question, no need for more information, as I would rather not mention the company. Thanks.
Well Chris, then there is production. You have confused revenue with production. Good luck.
Maybe your wells are shut in or pinched down because of prices/ pandemic?
Well, no, there is no production. I am not confused. If there is Zero volume, there no production. Hence there shouldn’t be a marketing charge.
For two months they were shut, No production. Why marketing charges?
Some marketing contracts have a low volume fee charged to the well if too little gas is sent down the pipeline (this is the midstream company charging the operator a fee, not the operator charging their own well a fee). This is protection for the midstream company as they typically incur costs to get a well or wells connected into their main line.
It’s hard to say without seeing the exact statement or talking to the operator. If you contact their owner relations (or general phone line, if they’re small), they should be able to provide you some answers without having to contact an attorney.
FWIW, this happens frequently when a new operator takes over. Unloved assets are sold by one company, the new company looks first thing at the Lease Operating Statement to see which wells are making them money and which aren’t (with expenses included), and they quickly have the wells losing money shut in while they evaluate if they need to plug the well or recomplete/workover the well to improve production. COVID commodity prices forced this process on everyone in April, but sounds like this started for you right when they took over first of the year.
Tracy, Thanks for you thoughtful post. Nothing has been shuttered and this company’s owner relations department is a one person show who cares not to discuss. I was told “the Old company was doing it all wrong.” Maybe so, but seeking a 200% marketing charge over the value of the volume produced. Let’s say RI was $1000. and their marketing fee was $2874 giving the royalty owner a negative loss of -1874. Loss can’t carry over, but RI owner is screwed. And suddenly ORI income is gone. Seems like theft to me. We’ll see.
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