Anyone else have UNREASONABLE processing fees deducted from their gas royalties? If so what can we do?
Thanks for any responses.
Mineral owners’ ideas of unreasonable and operator’s ideas of unreasonable may be on different ends of the spectrum. You can ask for a breakout of those fees. Gas post production costs can be very high-even over 100% in some counties.
I have contacted the company and prior to March 2016, the company that processes gas had been taking a portion of the gas at the gas plant as compensation for their processing service. Their contract then changed and instead of them taking a portion of the gas volume, the oil company was able to market most of the product. In exchange for this, they started to charge a service fee which is passed along to the royalty owners, but the volume that I’ve been paid on has also increased due to the contract change.
I’ve taken the time to do a sample audit and found: Dec 2013 price was $2.03 no charge so a net $2.03.
March 2017, price was $3.82 and a 71.5% deduction for a net of $1.08.
November 2019, price was $1.56 and a deduction of 135.7% for a net loss of $0.56.
So it appears that the higher the price of gas, the lower the deduction.
I know I’m not going to change things but am wondering why they would ever enter into such an agreement when there is such a surplus of gas and the chance of the price significantly increasing any time in the near future is unlikely.
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