Martha & Buddy,
Thank you both for sharing your knowledge. I have a better idea how we are getting paid and I'm sure a lot of other people have a lot more knowledge about this. Again, thank you both.
To all the mother's. HAPPY MOTHER DAY.
Please keep in mind also that the shale oils we are producing are tending to the "light" (aka "liquids rich") side. The "legacy oil" is heavier and more suitable for the product many refiners are needing. That's why we import a lot of oil yet and why the most refineries are based on the coast...which is where a lot of oil gets shipped. Many operators are blending thick oils that were always discounted severely with liquids rich products to produce a more refinery-friendly product. The people who do that then make money on the spread. Say they give $50 for light crude and $30 for thick oil and blend it costing ~ $10 a bbl. Then they sell it for $60 and net the profit. That became hard to do when prices were $40, but I know one fellow who was paying only $30 a bbl. for heavy crude from S. Oklahoma well before the collapse of oil. And I know some of the sour crudes in the Dakotas were at $50 when lighter sweet crudes brought $90.
Local refiners may change prices day by day or week by week, therefore, if your tank is drained only every 4 or 5 days, or maybe only once or twice a month, the price for crude can easily vary by $$ load by load depending upon the price as of the day it was delivered to the refiner and how long it was in the transportation phase between the well and the refinery.
Thanks TL, You are right. More and more pipelines are carrying blended to increase flow. Here's an example. http://www.energy.ca.gov/process/pubs/blend_light_w_hvy_ta_114626.pdf So, pipeline costs are less for blended and efficient drilling is driving oil prices down also. No more OPEC and US cheap oil is creating a free priced oil market. US predicts a 1.1 million increase in oil consumption due to the cheap oil changing the US consumer's oil usage and the US is predicted to use slightly more than the 1 million shale oil over supply. Traders said there is no over supply and started storing oil and when these traders believe global demand is increasing they will drive the price of oil back up.
According to my statement this month Devon comes in at $44.52 for oil sold in April.
Can anybody explain the deduction every month that comes under the heading of DEDUCT/ADJ?
Thanks!
Linda,
Go to Devon web site and download the "statement of oil & Gas Payments codes". Their isn't enough room on this site to put them all. That is why a person needs to sign a "no" deduction lease.
Under Codes on you statement, it probably has
# 04 Gathering
#14 mainline transportation
#23 Trucking fees.
These are just a few of what is on the sheet.
If you can't find it on line, call Devon up and ask them to sent it to you as you can't read the stub statement unless you have this sheet.
Devon does have one of the most informative stubs I have seen. The deduction will be under the "net information" section.
Virginia,
We have an addendum to all of our leases that we don't share in any post production expenses,so I am thinking that they may be taking out for these expenses as well.
Linda
Linda,
It's like selling stock., the date, time, etc. can make the different. Also, it depends on what the operating company contract for. I have never got the same price on the same day even on different wells. I don't think you will ever get the WIT price, at least I never have.
I did find out that several companies were selling on futures so they could meet their budget for the year.
Linda and Virginia, Some mineral owners are reporting that their lease addendums or exhibits are not being honored, because they did not include lease language making it a part of their lease. Devon is paying one of my Payne wells, but the lease states the Exhibit 'A' is made a part thereof and I have a no deduct clause in the Exhibit 'A', so Devon is not withholding any post production deductions. However, I do not know if Devon is one of the companies not honoring no deduct clauses.
Martha,
Devon returned my call last week regarding deduction showing under net, seems their there software was showing they were taking deduction, but as it turned out it was for OK Tax. They are hoping to get it fixed within the next couple months. They thanked me for finding the mistake. The guy was very nice and so far, they have been doing everything they can to get it fixed.
Thanks Virginia, You are such a great help! Take care, Martha
More Factoids:
Stephens Exploration selling to Phillips
2/15= $49.14
3/15= $45.52
Payne Exploration selling to Sunoco
2/15 = $48.82
3/15= $43.75
These ‘old posts’ come in handy in trying to figure out my royalty statements! I am still confused when they post the price of oil, calculate the interest, etc., and then the on the very next line deduct it. However, after reading this I think I have a better understanding why there are different prices - sold on the same day.
Virginia, do you know who you talked to? I had the same thing happen on my Devon lease with a “no deduct” clause,the lease sold, and they told me there was nothing they could do about it, that it was correct. I wholeheartedly disagree.
Andy, I do not remember who he was, but they have several people who do the same thing. You can email then and they may call you back. Sometimes, I have email them several times before they get back with me. I have found if you email them and they don’t call you back by noon the next day, I start email them every hour. I just add 2 notes, 3 notes, etc. They will usually get back a lot faster.
Good luck.
Virginia