HomeMy WebLinkAbout20222973.tiffChevron
RECEIVED
OCT 12 2022
WELD COUNTY
COMMISSIONERS
September 27, 2022
FSS--Production, Revenue &
Royalty Accounting
Tax & Royalty Reporting --
Royalty Disbursements
Comptrollers, Chevron Services
Company
P. O. Box 4791
Houston, TX 77210-4791
Tell -866-212-1212
Fax 713-754-3065
LandAdmin@Chevron.com
RE: Natural Gas and Natural Gas Liquids Royalty Calculation
Holman Settlement Agreement / Ace -Davis Settlement Agreement
Dear Valued Owners:
This letter concerns royalty payments made under the Holman Settlement Agreement or
the Ace -Davis Settlement Agreement. You are receiving this letter because Chevron has
identified you as a member of the Settlement Classes under the Holman Settlement Agreement or
Ace -Davis Settlement Agreement (or a successor to a class member). If you are not a class
member (or successor), you may disregard this letter. If you have any questions or concerns on
this topic, please see the contact information included at the end of this letter.
Pursuant to the Holman Settlement Agreement and the Ace -Davis Settlement Agreement,
this letter is being sent to all members of the Settlement Classes and the successors to those class
members in order to explain royalty calculation under the settlement agreements for the
preceding year. As you are likely aware, Chevron acquired Noble Energy, Inc. ("Noble"). As a
result of that acquisition and the integration process, in late 2021 royalty owners began receiving
a new supplemental check detail. This letter discusses both the check detail received in early
2021 and the supplemental check detail sent starting in late 2021.
Generally, under both settlement agreements, Noble (i) pays royalties on 100% of the
proceeds received by Noble on the sale of gas and natural gas liquids ("NGLs"), (ii) pays
royalties on 50% of the value of gas for which Noble does not receive proceeds because of
percentage of proceeds and/or percentage of products agreements, lost and/or unaccounted for
volumes and/or fuel volumes, and (iii) deducts 50% of the costs paid by Noble to providers of
post -wellhead services.
Noble makes gas royalty payments approximately 60 days after the end of the production
month.
CoNtun . G0.'t 1oA5
10/31/22
202,2-2873
L_EO \OO
Codes Used on Early 2021 Check Detail
As mentioned above, Noble deducts 50% of the costs paid by Noble to providers of post -
wellhead services. These values are identified on the early 2021 check detail by the codes
FRA1 for a fractionation fee, ELA1 and/or ELA2 for electricity, GTA1 and/or GTA2 for gas
gathering, TRA1 and/or TRA2 for transportation, and TTA1 and/or TTA2 for treating. Code
DJX-A-Wattenberg Settlement 50% reimbursement -shows that Noble added back 50% of
these costs, resulting in the deduction of 50% of the costs paid by Noble to providers of post -
wellhead services. Noble also paid royalty on 50% of the volumes used as fuel and which were
otherwise lost and/or unaccounted for. The code FUA1 represents a deduction for fuel. This
value is a deduction because 100% of BTUs associated with fuel and other lost and/or
unaccounted for volumes are included in the volumes on which royalty is paid. The net result is
the payment of royalties on 50% of the value of fuel and other lost and/or unaccounted for
volumes
Codes Used on Late 2021 Supplemental Check Detail
Royalty owners began receiving the supplemental check detail in late 2021. Noble
still (i) pays royalties on 100% of the proceeds received by Noble on the sale of gas and natural
gas liquids ("NGLs"), (ii) pays royalties on 50% of the value of gas for which Noble does not
receive proceeds because of percentage of proceeds and/or percentage of products agreements,
lost and/or unaccounted for volumes and/or fuel volumes, and (iii) deducts 50% of the costs
paid by Noble to providers of post -wellhead services.
There is a change in methodology to the calculation: rather than deducting 100% of
post -wellhead costs and then reimbursing 50% of that amount, Noble now just deducts 50% of
the costs paid to providers of post -wellhead services. The result is the same -only 50% of the
costs paid to providers of post -wellhead services is deducted. The types of post -wellhead costs
are coded on the supplemental check stub as follows: "Other" for a fractionation fee, "Process."
for electricity, "Transp." for gas gathering and transportation, and "Dehy" for treating. Noble
also pays royalties on 50% of the value of volumes used as fuel, and 50% of the volume of fuel
is included in the volume on which royalty is paid. The value of fuel on which royalty is paid
is identified on the supplemental check detail by "Fuel."
If you have questions you may email at landadmin@chevron.com or call (866) 212-1212.
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