Production costs?

Hi there. I’m leased with Chesapeake in La Salle County. They are sub contracting the gas to two different companies. How do I figure out why they are deducting production costs when Chk does not and has not in 12 years. The contracting co. keeps more than I receive. I asked. They said they can and it’s because Chk is just being nice. Is that ridiculous?
I read there was a ruling from the Texas courts that they are changing production cost matters.

Thank you.

It’s unusual to hear someone say Chesapeake hadn’t been making deductions, or seeing them characterized as being nice, since in years past they’ve been the subject of a bunch of lawsuits on that same point. But the answer to your question will depend on the wording in your lease rather than how Chesapeake was previously handling the accounting.

There have been some Texas cases in recent years where the court ruled against royalty owners with leases that didn’t properly hammer down the point on no deductions. If your lease appears to prohibit the type deductions currently being made you can try having an attorney write the operator a letter, but you may have to decide if it is worth going to court in order to enforce it.

Thats what I thought. Chk is not giving money away to be nice. Thank you for your reply. I will have to find my lease. Thank you for your reply.

I have a ratification describing my lease as a “non participating royalty interest”. Is that the same as a no cost? My husband passed away, left me the royalties. I don’t know as much as he did about the verbiage. Thank you.

No, a non-participating royalty interest typically means that mineral interest shares in only royalties, and didn’t “participate”, or receive a share, of an bonus payments that were made under the lease. A non-participating royalty interest often doesn’t include any executive rights, which is the power to negotiate a lease. If that’s true in your case, you are bound by the terms the holder of the executive rights related to your mineral interest agreed to.

If there are any restrictions on post production cost deductions from royalty they would have been included in the original lease agreement. If you only have a ratification and haven’t seen the actual lease you could get a copy of it from the La Salle County deed records. If it is an old lease the odds are probably low that it includes any limitations on cost deductions but since you say Chesapeake, for some reason, hadn’t deducted any for 12 years it would be worth finding out what the lease shows.

Thank you. I do have a copy of the lease and it does include cost signed by the executor. I have posted another question. I look forward to your answer there.
Again, thank you.

I made a mistake. It’s a non participating mineral interest but I think that’s close to the same?

Hello friends, I’ve asked this question in another form here, but know a bit more now. I receive royalties from Chk in La Salle County (Van Cleve) since 2012/13. My husband died not long ago. I’m having to fight some dragons. My gas goes to JGC and Stonegate. They now have a organizational group to deal with “problems). Chk oil pays like clock work and without much cost even though the lease says oil and gas cost can be deducted. (I don’t have executive rights so that was beyond my control) My DO says NPMI. It’s a standard lease. I have received checks from the gas peddlers, which for unknown reasons, have at times stopped payments on checks without explanation. I find out from my bank. The checks are seldom replaced, when, there seems to be much confusion and they are lumped with new checks. This is odd to me since some are very small amounts.
Gas cost deductions are appr. 60 to 75 percent. I asked why so excessive and why the returned checks? No explanation. I suggested we do this through attorneys. A very slow liaison land woman working part time called to tell me that due to “good faith efforts” the companies will not charge cost into the future as of August 2021. The September check will adjust and credit also. I asked about the high cost in the past again. She didn’t have time, doesn’t know, will let me know now for 16 months. My squeaky wheel seems to have the no cost future deductions clarified IF they pay. I am puzzled why these companies would now be willing to drop the costs. Huge corporations usually don’t work on “niceties”.
Should I pursue this? Should I just wait to see if their good faith will make a difference in the future? Should I now worry about them changing their mind or keep asking, making some demands about past cost explanations? It’s all Greek to me and I don’t want to throw good money after bad with extensive attorney work. One told me the statute of limitations is four years going back and all that was probably wiped out in the Chk. bankruptcy. How do I bow out gracefully if I want to end this battle? They wear me down every time. We are talking about a $25,000 difference over 10 years maybe and I don’t want to anger the Gods, but on the other hand, I don’t trust their accounting into the future.
Any advice would be appreciated. Thank you Evelyn