Nearly 4 years ago our neighborhood group signed a gas lease with Chesapeake. At the end of the third year, just before the contract was to end or be released, they drilled. The area has been producing for nearly a year now. Only one neighbor who has a very large lot has received a royalty. I called Chesapeake and was told that they will not send a check till the amount is over $50. I find it hard to believe that the rest of us have received nothing.
Nancy
You don't mention what state you're in, but in Oklahoma checks can be held until $100 accrues or paid once a year - whichever comes first.
Also, regardless of what state you're in, your lease may state that Chesapeake doesn't have to pay until royalties equal $50.
Nancy:
As Ann stated, read your lease (most likely the small print). This should clarify your situation. Remember, the value of gas has been very low and according to your post, several people share the unit.
How much $ did your neighbor (large lot) receive ? How many acres does this neighbor have, and how many acres do you? With this, you should be able to calculate how much $ is accruing for you (assuming all in group are at same % royalty).
oldoak said:
How much $ did your neighbor (large lot) receive ? How many acres does this neighbor have, and how many acres do you? With this, you should be able to calculate how much $ is accruing for you (assuming all in group are at same % royalty).
Their lot is maybe 3x the size of ours. It just seems strange that they received a check about 4 months ago. I believe they received a little over $100. I believe they have received another check since then. Is there an agency we can check with to see what is happening?
Thanks for everyone's help.
Nancy
Ms. Heath, the fact that Chesapeake is the operator may be the answer to your question. You should do a search of "Chesapeake" and see what those who are leased to them are saying. From what I can recall, even with the commodity price of natural (dry) gas approaching $3 per thousand cubic feet, that Chesapeake, with approval of the courts, has found a way to backcharge the mineral owner the maximum for post production charges, gathering, compressing, dehydrating, transporting, separating, marketing, all this before they sell the gas to an afilliate for a sweetheart deal price. This sweetheart deal price is what you are paid royalty on [if you do not have first arms length transaction language in your lease] after all the deductions, including state production and severance taxes. I have seen a post by one man that he had been paid less than 20 cents for a mcf which is 1,000 cubic feet of dry gas. Chesapeake is a large company fighting for it's life and future. Chesapeake is getting loans so they do not have to sell off large parts of their holdings at firesale prices, but sell they must and they must scrape up every dime they can along the way. This time, it's your dime. You have my sympathy, as does all the other people in the same situation.
That is exactly what I was thinking. We are all beginning to think that it was a mistake to even sign the gas lease. I appreciate your verifying my thoughts. I guess there is nothing we can do.
Nancy
r w kennedy said:
Ms. Heath, the fact that Chesapeake is the operator may be the answer to your question. You should do a search of "Chesapeake" and see what those who are leased to them are saying. From what I can recall, even with the commodity price of natural (dry) gas approaching $3 per thousand cubic feet, that Chesapeake, with approval of the courts, has found a way to backcharge the mineral owner the maximum for post production charges, gathering, compressing, dehydrating, transporting, separating, marketing, all this before they sell the gas to an afilliate for a sweetheart deal price. This sweetheart deal price is what you are paid royalty on [if you do not have first arms length transaction language in your lease] after all the deductions, including state production and severance taxes. I have seen a post by one man that he had been paid less than 20 cents for a mcf which is 1,000 cubic feet of dry gas. Chesapeake is a large company fighting for it's life and future. Chesapeake is getting loans so they do not have to sell off large parts of their holdings at firesale prices, but sell they must and they must scrape up every dime they can along the way. This time, it's your dime. You have my sympathy, as does all the other people in the same situation.