Gas Price on Statements

For several months price per MCF on statements looks very low on Operator B. Different operators on different wells not far from each other in Howard County. Operator A, June production MCF sale price was $2.84. Operator B, June production MCF sale price was $.89. Operator A is very close the the EIA price for June. Operator B is way below the EIA price for June.

How could the price on the statement for Operator B be so low? I would ask the operator B to explain that price on the statement but I am not even sure how to ask the question.

There can be a number of factors. If Operator B is paying gas and products separately, then you need to add the revenues together to determine the true price. Sometimes one operator will report the total wellhead gas mcf and another operator will use the lower tailgate mcf on the check. This can cause a significant price difference. To compare, for each well, you should pull the RRC gas volumes; add the gas and NGL sales for the well; and then divide the total sales by the RRC gas mcf. This will give you a better price comparison. Operator B may be paying the wellhead price (sales less post-production costs) and not itemizing the costs on your check detail. Operator B may be selling to an affiliate at a lower price. Operator A may have negotiated a better gas marketing contract.


Donna L, did you contact Operator B about the price difference. The difference between A & B is so significant it warrants investigation. TennisDaze had good thoughts that Operator B may be paying NGL royalties separately, and those royalties would need to be added to the Natural Gas (Residue) royalties to get a fair comparison.

Hi Donald, no I have not tried that yet. Not quite sure how to do it.

Hi DonnaL, write owner relations and ask why the pricing disparity. Send the letter Certified Return Receipt for more effectiveness. Include as an attachment the two check stubs. After that follow up with an email including the letter with check stubs. You should get an answer.

Are these companies A and B known players or are they small?

Yes, Birch Operations

I’ve never heard of Birch, but according to Mineral Answers they are ranked nationally #31 in terms of Barrels of Oil Equivalents produced. So they are quite large. Their mailing address is: Birch Operations, Inc.909 Fannin Street, Suite 1350, Houston TX . 77010

Does your lease with Operator B allow for the deduction of post-production expenses?

Lease seems to read reasonable fees. I did the math using RRC and the price looked better. See attached. New question is about the gathering fee. They are about the same the value???

Total gas sales = 9446.88 +3730.81 + 36142.06 + 13307.66 = $62,627.41. Price = 62,627.41 / gas volume for May 2023 reported to RRC. Costs = 9134.69 + 4758.97 + 1768.10 + 1205.60 + 3994.04 = $20861.60. So the costs are 1/3 of the total sales for May. Generally each type of cost is assessed on a per mcf basis and will be close each month. Eg gathering = 9134.69 / mcf produced. Treating = 5964.57 / mcf produced. So as gas prices rise and the cost per mcf remains the same, the costs will be a lower percentage of total sales. Or as gas prices fall and costs per mcf are the same, the costs will be a higher percentage of sales.

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