Hello everyone! ATTENTION to those that have production with Antero Resources! Please CHECK YOUR PAYMENT DETAIL! I noticed on my check statement from Antero last month that my “distribution interest decimal” x the “Property Value” did NOT equal the “Owner Value”. However, my “distribution interest decimal” x the "Property Volume DOES equal the “Owner Volume”. But, the “price” x the “Owner Volume” does NOT equal the “Owner Value”. After checking back through statements this is true of the last 12 wells that have been put in pay and extends back to the beginning of production! On this last check in May I was shorted by $9,742.00! The really weird thing is that on Oil on all these wells the calculation is correct. All the older wells are all correctly calculated too. Antero’s so-called “landowner hotline” is a total misnomer as they will be many days past before they respond. I had called and left a message and they responded about 18 days afterward but did NOT answer the question but seemingly thought I was asking if my owner distribution decimals had changed. I sent an email inquiry and am yet to hear back after 1 month. *** If you find the same thing is happening to you please let the forum know. This is very egregious! These check statements are so full of numbers that it is hard to catch something like this. Spreadsheet programs do not “miscalculate” unless a wrong formula has been entered. How much has Antero “skimmed” from landowners through this? If it’s big enough and widespread enough there could possibly be a class-action lawsuit in the works.
For GAS, it looks like Antero is listing the net royalty (after deduction of transportation, CMR1 and gathering costs) in both the gross royalty column and the net royalty column. It is not listing the gross royalty and all the costs. 1st well at 0.00026628 - Gross Sales 699,408.69 = 186.24; Gross Transportation -55842.35 = -14.87; Gross CMR1 -43741.41 = -11.65 and Gross Gather -39.09 = -.01. Net Royalty as follows: 186.24 - 14.87 - 11.65 - 0.01 = 159.71. For OIL, Antero is paying on the Gross Sales and not deducting the WV severance tax or any costs. Works out similarly for the next well at 0.00025844.
The problem is that on all these wells that have this problem, my leases are Gross Proceeds at the wellhead with specific exclusion of all post production expenses in the Addendum to the lease. Other wells on the same statement that are NOT gross proceeds leases show all the “owner deductions” for transportation, compression, etc. and show those charges subtracted from the owner value with the result in the “Amount after taxes and deductions” column. (See screenshot below). So, they are trying to take these out on the sly it looks like.
I do not know how the various lease royalty clauses interact in WV. However, in Texas, gross proceeds at the wellhead by definition is the ultimate sales price less all post-production costs from the wellhead to the point of sale (transportation, gathering, processing, etc). If the gas is valued at the wellhead, that term overrides any subsequent language about ‘no costs.’ This is effectively the same as being paid at the processing plant and then deducting the post-production costs incurred from the wellhead to the tailgate of the plant. To be paid royalties cost-free, you must be paid at the processing plant without any deductions for costs. This is why Texas lessees agree to add no cost language when the lease references the value at the wellhead - because the no-cost language fails. It appears that Antero is applying this standard to your leases and paying you either at the wellhead (net proceeds being gross sales with costs already deducted) or at the point of sale (gross sales and then deducting the costs). You need to ask your oil and gas attorney about whether this is proper under WV law and the lease provisions or whether you can get the costs refunded.
That is NOT the case in West Virginia. The “gross proceeds at the wellhead” language in West Virginia Law and Precedent dictates that NO post production expenses or taxes will be taken out of the royalty payments unless specific permission to do so is included in the lease language. See the court case pasted below that finalized this determination.
TAWNEY v. COLUMBIA NATURAL RESOURCES FKA _ FindLaw.pdf (121.1 KB)
Good to know. Consider sending a certified letter demanding that the royalties be paid in conformity with your lease terms. That often gets better attention.
Antero has three to four different “cost free” royalty addendums. Which one do you have? Or did you have an older HBP lease that’s states "cost free " at the wellhead? Did you sign an amendment and ratification (Modification)? Need a little more details.
No modification or amendment. This situation deals with 6 different leases, but all have nearly the same gross proceeds clause. I have attached it below:
Antero clause.pdf (278.7 KB)
That language specifically prohibits deductions for:
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Gathering
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Transportation
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Compression (arguably included within gathering/transporting)
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Dehydration
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Separation
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Stabilization
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Processing
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Marketing
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Production-related costs
However, the final sentence creates an exception:
“Lessor agrees, however, that Lessee may deduct from such royalty payments Lessor’s same proportionate share of all production, petroleum excise and severance taxes.”
Therefore, under this clause the operator may deduct taxes (severance taxes, production taxes, petroleum excise taxes), but may not deduct post-production costs such as gathering, compression, processing, transportation, or marketing.
One thing to watch: the clause is titled “Gross Proceeds at the Wellhead Clause.” In some states, operators have argued that “at the wellhead” valuation language allows certain deductions despite no-deduct language. Courts have treated that issue differently depending on the state and the exact lease language. In Pennsylvania, strong “without deduction, directly or indirectly” language like this generally provides significant protection against post-production deductions, but the entire lease should be reviewed because other provisions can sometimes conflict with or modify this clause.
But in West Virginia with an addendum that expressly says royalties are paid without deduction, directly or indirectly, for gathering, transportation, processing, compression, dehydration, and marketing, I would expect the clause to be viewed as prohibiting post-production deductions except for taxes specifically authorized by the lease.
send a certified letter to Antero with signature required.