This article from the Pittsburgh Post-Gazette describes a royalty owner’s experience with Chesapeake Energy.  In short, Chesapeake ignored a lease clause stating that no deductions would be taken from the royalties.

This owner’s experience is very common.  Chesapeake is known for taking post-production costs out of royalties, even when the lease explicitly says they can’t.

If your minerals have been produced by Chesapeake, you should take a look at your check stubs.  You will probably find that post-production costs have been taken out.

Here in West Virginia, the only costs that can be taken out are those that have been specified in the lease and for which a method for calculating them has been shown in the lease.  See Tawney v. Columbia Natural Resources.  Most leases don’t meet this standard.  Most companies shouldn’t be deducting post-production costs.

Chesapeake isn’t the only company that will deduct post-production costs when they’re not supposed to.  Our office recently got Antero Resources to pay out close to a quarter million dollars in post-production costs they weren’t supposed to deduct.  We didn’t even have to go to court for that one.

If you suspect that post-production costs have been deducted from your royalties and you can’t work out the issue with the producing company, give us a call and we’ll help you out.  304-473-1403.