HomeMy WebLinkAbout20083813.tiff 1625 y nm noble
Denver,Co 80202 energy
Tat 303.2294000
Fax 303.2294280
w w.nobleenetgyino.com
Fax
North Amenq°Won
Date: August 21,2008
To: Stephanie Ames Prom: Lorne Johnson
Company: Weld County. Senders Phone: 303-228,4257
Receivers Phone: 970-338-7235 senders Pax: 303-228-4287
Receivers Frost 970-352-0242 Total No.Pages: 2
Subject Schank J 35-17(CN)well(NEI Prop.#118310030)
O Urgent x For Review O Please Comment O Please Reply d Please Recycle
Message
Stephanie—1 have hand-written in the calculations for Weld Co's.interest in the above well. I didn't
realize the Lesser well was in a different section.so of course I didn't request those title files. So,Ill have to
request those when I return from vacation on Sept 2.
Lome D.Johnson,CDOA
•
2vog-38'13
MEMORANDUM
This Memorandum is being sent to all royalty owners who were parties to the Settlement
Agreement which resolved the Ace Royalties and Davis litigation and who received payments based on royalty
interests or overriding royalty interests ("Royalty Payments") for production in 2008.
As part of the Settlement Agreement, Noble agreed to a new method of calculating Royalty
Payments, called the "Future Royalty Calculation Method." Under this method, Noble now calculates Royalty
Payments by deducting only 50% of post-wellhead expenses, as specified in the Settlement Agreement, instead
of deducting 100% of those expenses as in the past. In general, "post-wellhead expenses" include expenses
incurred after the initial measurement point to gather, compress, treat, and process natural gas and natural gas
liquids for delivery to an interstate pipeline.
Noble was to use the Future Royalty Calculation Method for production beginning January 1,
2008. Because of technical problems, Noble was delayed in implementing the Future Royalty Calculation
Method, and, consequently, Noble will begin remitting Royalty Payments using the Future Royalty Calculation
Method for production occurring in May 2008. Noble makes its Royalty Payments approximately 60 days after
the end of the production month. Accordingly, the check you receive in July 2008 will include your Royalty
Payment based on the Future Royalty Calculation Method for production in May 2008. The check also includes
a "true-up" amount paying you the difference between the amounts of Royalty Payments actually made to you
for January through April 2008 production and what your Royalty Payments would equal under the Future
Royalty Calculation Method, plus interest on the difference calculated at 8% per annum. All future Royalty
Payments will be based on the Future Royalty Calculation Method.
Because the method of calculating royalties has changed, the check stub accompanying Royalty
Payments has also changed. (The changes described here apply only to entries for natural gas, designated with a
"G" in the next-to-left-hand column of the check stub, not oil.) The check stub you will be receiving in July
will have two parts: the first part will have entries for January, February, March, and April 2008 production;
and the second part will have entries for May 2008 production.
January through April 2008 Production. The entries on the check stub for January (01/08),
February (02/08), March (03/08) and April (04/08) production reflect only the "true-up" payments described
above. The VALUE columns for January through April reflect the total amount of post-wellhead expenses
ii Feu n a-GIGS basis-and OWNER(percentage share)-basis--which were deducted from-the cheeky-you -
have already received for January through April gas production; and the NET SHARE column for January
through April reflects the amount of the "true-up"payment being made to you for 50% of those expenses.
The check stub breaks out post-wellhead expenses into several categories. The fuel charges are
identified as "FULX" in the next-to-right-hand column. Gathering and processing charges are identified in the
same column as including the following, where applicable:
GTHX Gathering
PRCX Processing to remove impurities and/or liquids
TRNX Transportation to the processing plant or interstate pipeline
POPX Percentage of proceeds retained by the buyer or other third
party to provide gathering and/or processing
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•
For many wells, only one or two of these codes will be used. There is also a code "DJX" that appears on the
check stub. That is a place holder required by our computer program and should always equal $0.00 in the
OWNER column.
The January through April entries on the check stub also include a code for INT in the next-to-
the-right-hand column. This is shown as a negative number and reflects the amount of interest to which you are
entitled because of the delay in implementing the Future Royalty Calculation Method. Although it appears as a
negative number, the INT entry increases the amount of your check. The INT code will not appear on future
check stubs.
May 2008 Production. The second part of your July 2008 check stub will show Royalty
Payments and deductions for May 2008 production as calculated under the Future Royalty Calculation Method
described above. There are two groups of entries for gas (G) produced in May 2008 (05/08). The first group of
entries for 05/08 gas production reflects a per Mcf price (PRICE) in the fourth column; the quantity (Mcf) of
gas produced at the wellhead (QUANTITY); and a value(VALUE), which is the net amount of money received
for the gas and associated natural gas liquids after deduction of 100% of the post-wellhead expenses. (The
PRICE is derived by dividing the VALUE by the QUANTITY.)The next two columns show the total taxes paid
by well, including the following:
ADV Ad Valorem Tax
SEV Severance Tax
CON Conservation Tax
100% of the taxes attributable to your royalty share are deducted from your payment. Your percentage share of
the net value after deduction of taxes is shown in the far right-hand column(NET SHARE).
The second group of entries for 05/08 gas production relates to the post-wellhead expenses. The
VALUE shown in the sixth column is 100% of the post-wellhead expenses, broken out in the same categories
described above. The OWNER VALUE represents your percentage share of all post-wellhead expenses, while
the OWNER NET SHARE on the far right-hand side represents an additional payment to you in an amount
equal to 50%of the post-wellhead expenses.
Your total payment for May gas production is the OWNER NET SHARE in the far right-hand
column of the first group of 05/08 entries plus the OWNER NET SHARE in the far right-hand column of the
second group of 05/08 entries. These calculations result in your receiving a total Royalty Payment that deducts
only 50% of post-wellhead expenses, as specified in the Settlement Agreement.
If you have any questions concerning any of these matters, you may call (303)228-4300.
Noble Energy, Inc.
July 25, 2008
I
1.
flrillI4tlig:' -
WELD COUNTY ATTORNEY'S OFFICE
915 TENTH STREET
P.O. BOX 758
ill
GREELEY, CO 80632
I
WEBSITE: www.co.weld.co.us
Ill O PHONE: (970) 336-7235
•
FAX: (970) 352-0242
COLORADO
July 28, 2008
Noble Energy, Inc.
Attention: Marilyn Peoples
1625 Broadway, Suite 2000
Denver, Colorado 80202
RE: Well No. : 118310030 - SCHANK J 35-17 (CN)
Dear Ms. Peoples:
This letter is written regarding the Division Order received by Weld
County for the above-referenced property. The County would like to have
copies of the information relied upon by you in determining its
interest in this property, as Weld County had several division Orders
for this property from several different companies, and all of the
decimal interests are different. These previous leases primarily
address portions, and not all of the NE 1/4.
In addition, we will need some information regarding Noble Energy's
method of calculating of the County's decimal interest.
Your assistance in this matter is greatly appreciated.
If you have any questions or comments, you may reach me at 970-356-4000
Extension 4394.
Yours /Eruly,
GZl/lti�
Ss ep nie kx,Arries
Assistant Weld County Attorney
Enclosures
pc: Clerk to the Board, Weld County Board of County Commissioners
l' ,
_.L AND GAS DIVISION ORDER LJ /11
Date:June 25,2008
Well No.:118310030
Well Name: SCHANK J 35-17(CN)
Effective Date: February 16,2008
To: Noble Energy, Inc.
1625 Broadway,Suite 2200
Denver, CO 80202
Each of the undersigned, individually, for themselves, their heirs, successors, and assigns, hereby
represents, warrants, and guarantees to Noble Energy, Inc.(hereinafter referred to as the "Company"), its
successors and assigns, that the undersigned is the legal owner of the decimal interest, as set forth below opposite
each undersigned's name, in the proceeds from all oil,condensates,and natural gas which may be produced from or
allocated to the following-described area or well located in the County of WELD, State of Colorado, and more
particularly described as follows:
Township 5 North,Range 66 West,6"'P.M.
Section 35: NE/4
Commencing on the effective date hereof, the Company is hereby granted and authorized to take and
receive all oil, condensates, and natural gas which may be thereafter produced from the above-described area or
well and, subject to the other terms and conditions hereof,to give credit therefore to the undersigned in accordance
with the,division of interest schedule as follows:
Credit To Owner Owner Name Decimal
No. &Address Interest Type
18032 WELD CO CLERK TO THE BOARD 0.00683594 RI
AT WELD COUNTY GOVERNMENT
PO BOX 758
GREELEY, CO 80632
Additionally, in consideration of the wells drilled or to be drilled on the above-described lands and the
payment to the undersigned of royalties on production from said wells, the undersigned agree, grant, and represent
to and with the Company as follows:
1. Oil (including crude oil and condensate)shall become the property of the purchaser thereof upon
its delivery to the purchaser or to the purchaser's agent or carrier, and payments hereunder shall be based upon the
net price received therefore from the purchaser. Oil shall be graded and measured in accordance with applicable
rules,regulations,or standards generally accepted in the industry. In the event that the Company is the purchaser of
such oil, settlements therefore shall be based upon the Company's posted price for similar oil in the field where
produced and in effect on the date of delivery, or if no posted price is then in effect, settlements shall be based upon
the then prevailing market price on the date of delivery thereof in the field where produced. If the oil is purchased by
the Company and resold to another purchaser accepting delivery thereof on the premises, settlements hereunder
shall be based on the net price received therefore by the Company. The Company may deduct from any price
received for the oil the reasonable costs of transporting and/or treating the same if incurred.
2. Natural gas, including casinghead gas if marketed with gas well gas, shall be delivered and sold to
and become the property of the pipeline company to whom the gas is agreed to be sold by the Company.
Settlements to the undersigned shall be based upon the terms, conditions and prices for said gas as agreed to with
the pipeline company and/or gas purchaser less post production costs from the wellhead to the point of sale,
including but not limited to gathering,compression,transportation,dehydration and transmission.
3. Oil and natural gas produced and sold from the premises is or may become subject to orders of
certain regulatory authorities who could vary the terms of any agreement for the production or sale thereof. To the
extent that such orders do modify or change current sales or production arrangements, the provisions thereof, as
well as the provisions hereof,shall be so modified accordingly.
4. Settlements hereunder for oil and gas shall be made monthly by the Company mailing or delivering
their check to the undersigned at the address indicated in an amount, less taxes required to be withheld, calculated
in accordance with the schedule of interest as herein contained. Settlements shall be mailed no later than the 25th
day of each month for oil and/or gas taken or sold during the second preceding calendar month. If at any settlement
date the amount payable to any of the undersigned shall be less than Twenty Five Dollars($25),the Company may
defer such payment and make payment when such settlement amount has accumulated to Twenty Five Dollars
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