We have a well that was producting for 19 months, before we found out form another owner that the well was payer them royalties.
When we received our first check there where charges for production costs for the first five months, from August 2010 to Dec 2010. From Jan 2011 to May 2011 the production cost where charged, but then backed out.
I have not found anything in my least that address production cost.
Is it possible to recover the production costs?
As you can see this was all done without my knowledge.
Mr. Thompson, I think you need to have the language in no uncertain terms in your lease that the lessee/operator can not take out post production costs...or they can.
Mr. Kennedy is referring to Post Production costs, such as transportation costs.
There has been a recent trend in the industry where companies are trying to charge royalty owners what the companies feel is their share of such costs.
But you said "Production Costs". Are they trying to charge you for a portion of the costs of drilling and completing the well?
Either way, I advise you to consult a qualified Oil and Gas Attorney on this one.
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
The production cost check entires I'm refering to are labeled "PLANT PRODUCTION" costs on the royalty check.
This is why I think they charged me for building the pipline and gathering infrastrurture.
The transportation costs are included with the GAS and RESIDULE entries.
Parts of the gas are often called plant products and it probably takes no small amount of effort to seperate the propane,pentane,ethane, butane,hexane, ect from the dry gas. I don't know about charging you for the pipeline but it is probably safe to say they charged you for the compressor and probably some other equipment, possibly including the gathering pipeline.
I just noticed this posting on the forum from earlier today that you all might find enlightening:
Chesapeake is going to go down in history as one of the sleeziest companies to have ever existed. And probably leave a bigger skidmark than Enron ever thought about leaving.
Where do these people come from?