We finally got our first check for royalty payment. I do have a problem with the amount that was paid. I have sent a letter to Chesspeake asking them to explain 4 point that I listed. They did not pay for the amount of gas that was reported to SONRIS, one month was over 58,000 MCF less than reported. Another point was the price for Wellhead Gas paid was less than the market value. In all the check sent out was about $3,000+ less than it sould have been. Working in the oil fields now for over 50 years, still working, I find this very upsetting. I requested a reply from Chesapeake before Christmas. If they do not respond very soon, I will ask the Louisiana State Attorney General's office to look into this matter.
Have any of you done any checking on your payments to verify that what they paid is the correct amoung? Please let me hear from you regarding this matter.
Larry,
What source did you use for your market value price. Also as you probably know, the checkstub (and Sonris) reflect volumes in mcf, while market value pricing (including NYMEX futures prices) is based on mmbtu's. In order to truly compare what you're paid on a unit basis to a market index, you need to adjust for the sales btu. Did you take the sales btu into account?
Donald, I am in the oil and gas businees, have been since I finished high school in 1951. The values I used are correct there is no problem there. As for the marked value price, I used the posted market price for Well head gas. Their price was exactly what was posted excet for 2 months. The valud of reported gas to SONRIS was also the same except for the month of July. I did not accuse Chesapeake of any wrong doing but I Want and explanation. I am a registered Professional Engineer here in the State of Louisiana and work as a Corrosion Engineer. I deal with volumes of gas often. I expect an answer for the areas that I see do not look right.
Hopefully you'll get a timely response.
I've been auditing oil and gas revenue since the early 1980's (including work for the State of Louisiana, and other large royalty owners), and certainly laud your efforts to monitor your royalty check.
It will be interesting to find out if the volume difference was a misreporting to SONRIS or to your royalty check. By the way, where in SONRIS are you finding value information? I've found SONRIS to be great for volumes, but was unaware that it contained any value data.
Donald, I do not get Value information from SONRIS. Being in Lafayette, LA and having worked in this industry, I have many sources for getting Value information. In the 1960's I did some of the original CP designs for what was then TEXACO, Inc. which was part of the Henry Hub of today. I still do work for major pipeline companies, producing companies and small and large natural gas distrubtion companies.
Donald Skotty said:
Hopefully you'll get a timely response.
I've been auditing oil and gas revenue since the early 1980's (including work for the State of Louisiana, and other large royalty owners), and certainly laud your efforts to monitor your royalty check.
It will be interesting to find out if the volume difference was a misreporting to SONRIS or to your royalty check. By the way, where in SONRIS are you finding value information? I've found SONRIS to be great for volumes, but was unaware that it contained any value data.
Larry, when you said, "The valud of reported gas to SONRIS was also the same except for the month of July," I thought you had discovered a magic value portal in SONRIS.
Yes it is good to have sources for value. Of course there are public sources available. The Energy Information Agency publishes average gas and oil prices by area, there are NYMEX futures prices, which are based on deliveries at Henry Hub, and other royalty checks you may receive from other producers in the area can be a guide. You can also subsribe to services like Platts or Natural Gas Week, which publish recognized index prices that many purchase contracts are based on.
So, it sounds like you negotiated a "market value" clause in your lease, as opposed to "proceeds" based royalty determination?
If you do have a market value clause, then you will have to monitor your royalties closely. Despite what your lease may say, producers generally pay royalties based on their net proceeds, and are not set up to calculate royalties on other basis (e.g., royalties based on the highest price paid in the field, or parish, or county; or an index price less $.xx). The other area to watch-out for is excessive deductions.
1 Like
Well as of today January 23, 2012 I have not received any more information from Chesapeake regarding the questions I sent them back in December, before Christmas. I have contacted the State Attorney Generals Office asking them to help me. I will also contact the Consumer Protection Agency this week. We are now owed Royalty payments for the month of October and November. December will be due next month. It bothers me because I do not think Chesapeake can continue with the Gas prices as low as they are now. Borrowed Money. I hope I am wrong but from where I sit, it does not look good. As royalty owners, we will not loose in the long run but it will take time. If nothing is done with the direction I am taking, then we will have to go to the company that drilled and is producing the well, in this case XTO ENERGY (EXXON).
Larry, Louisiana laws favor royalty owners greatly, and the operators know this. In several instances, I got no where getting the companys' attention by myself. I hired an excellent New Orleans oil and gas attorney, who forwarded my claims. I got immediate attention, followed by the cash that was owed. In Louisiana there is the threat of treble damages (actually your initial damages + double damages). They will not mess with you if they know you know your rights. Sadly, such is not the case in Texas.
I am not worried about getting our royalty , the problem I am having is HOW they are calculating the royalty due. I found a few things that did not look right in the royalty check we finally got. The gas paid for in one instance did not match what was submitted to SUNRIS plus the amount Per CFM was not correct. I have only asked them to respond to my questions. When they disregard that, that puts up a FLAG in my books. Yes, I do know our rights here in Louisiana and would not hesitate using them if I do not get a good answer. I have given them over a month to reply to my questions, nothing yet. So I have taken the first step to get answers.
Donald Skotty said:
Larry, Louisiana laws favor royalty owners greatly, and the operators know this. In several instances, I got no where getting the companys' attention by myself. I hired an excellent New Orleans oil and gas attorney, who forwarded my claims. I got immediate attention, followed by the cash that was owed. In Louisiana there is the threat of treble damages (actually your initial damages + double damages). They will not mess with you if they know you know your rights. Sadly, such is not the case in Texas.
Donald,
Do you mind me asking in what area of LA were your no payment problems? How did you find this Atty in New Orleans? Was he referred to you? You did recommend him to me a while ago, and I appreciated that. I haven't pursued anything any further. It is time for me to "Lawyer up", however. I am wondering about hiring an Atty in another area, when my issue is in the Shreveport area. Is there a disadvantage to that? Thanks. Ruthann
Our proerty is in the DeSota Parish area, but when you have LA judges giving Companies the right to set up Shell Companies to run the production through to keep from paying the Royalty owners Well head price for gas sold, LA Law does not help. Now if we had a very large section of land, then, Yes. we could hire an
Attorney but the cost of the Attorney is very expensive and the Companies KNOW that, so they take advantage of the small land owners.
Hi Ruthann,
Most of my royalty problems were in Lincoln Parish in N. LA; however I also recovered missing royalties in Iberia and Terrebonne in S. LA. I met Edward Poitevent, III, many years ago, when I was an expert for one of his oil and gas clients in a State Lease 340 and Texaco matter. Based on my experiences in Louisiana and other states, where the attorney is from, within the state, is not critical. What is important is that the attorney be very knowledgeable of the oil and gas law within the state. If you have a valid claim, and your claim is for a significant amount, you can not afford to pursue it without legal assistance. As an oil and gas royalty valuation expert, I can identify the issues and quantify them (as I have done both for clients and for my own royalty interests), but I really don't get the attention of the oil company, until the attorney puts my words and numbers in a demand letter. And, that's how I mitigate costs. So, involving an attorney is not necessarily cost-prohibitive. It does get expensive taking it to trial (which I have also done). But if you are confident in your royalty claims, Louisiana law provides excellent protection for the royalty owner, between treble damages, interest and possible recovery of legal expenses.
I agree with you but we do not have that much property under lease so unless we want to just hang on and wait till they finally screw up, there is not much we can do. But, I have met with the Atty Gen here in the State of La and I am collecting necessary information he needs. It may take me/us a while but in the end, WE will beat them. I am a Consulting Engineer and have over 50 years in the Oil Patch. Have never see more Unprofessional Oil People like the bunch from CHK.
Hi Donald,
I have looked at Mr. Poitevent's credentials. Could he possibly be a bit too "overkill" for what we may need....and perhaps might be too expensive (although they all are probably expensive!). At any rate, I am not sure how much royalty that this company is holding in suspense. Would we be better off to contact a Landman to check out what we potentially may have before taking the step to hire an Attorney? ......or would that possibly be unnecessary since the Attorney would probably have to double check the Landman's report anyway? Obviously, I am confused as to what to do.....R
Ruthann Jones said:
Donald Skotty said:
Hi Ruthann,
Most of my royalty problems were in Lincoln Parish in N. LA; however I also recovered missing royalties in Iberia and Terrebonne in S. LA. I met Edward Poitevent, III, many years ago, when I was an expert for one of his oil and gas clients in a State Lease 340 and Texaco matter. Based on my experiences in Louisiana and other states, where the attorney is from, within the state, is not critical. What is important is that the attorney be very knowledgeable of the oil and gas law within the state. If you have a valid claim, and your claim is for a significant amount, you can not afford to pursue it without legal assistance. As an oil and gas royalty valuation expert, I can identify the issues and quantify them (as I have done both for clients and for my own royalty interests), but I really don't get the attention of the oil company, until the attorney puts my words and numbers in a demand letter. And, that's how I mitigate costs. So, involving an attorney is not necessarily cost-prohibitive. It does get expensive taking it to trial (which I have also done). But if you are confident in your royalty claims, Louisiana law provides excellent protection for the royalty owner, between treble damages, interest and possible recovery of legal expenses.
Go get 'em!
Larry G. Smith P.E. said:
I agree with you but we do not have that much property under lease so unless we want to just hang on and wait till they finally screw up, there is not much we can do. But, I have met with the Atty Gen here in the State of La and I am collecting necessary information he needs. It may take me/us a while but in the end, WE will beat them. I am a Consulting Engineer and have over 50 years in the Oil Patch. Have never see more Unprofessional Oil People like the bunch from CHK.