STEPHENS ENERGY CORP. - The Railroad Commission of Texas

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cc: Texas Alliance of Energy Producers Railroad Commission of Texas Representative Jim Keffer Representative Ri Hardcastle Dean Hoy Bobby J. McGuire
March 2,2005 Chairman Houde Energy Resources Committee 14m MO~WMERY STREET FORZ WORTH, ZEUS 761#7-3116 OIL AND GAS EYPLORA TIONAND PRODUCTION Re: Texas Competitive Natural Gas Act, H.B. 82 1 1) Name: Marshall Tillman Company: Kornye-Tillman Company Position: President 2) Background: 24 years in Oil and Gas industry, initially as a Petroleum Landman, a VP of Exploration and now as owner on an independent Exploration and Production Company with operations in Eastland, Palo Pinto and Stephens Counties (60 producing wells). 3) Gas Contract Experience: Began in the mid 1980's. In those days things were relatively simple, the producer agreed to sell gas to the pipeline company at a fixed price and stated term. In the early 1990's contracts evolved into percentage contracts based on the Houston Ship Channel Index Price (HSCJP). These were generally 82%-87% of this Index without deductions of any kind. At one point Mitchell Gas Services dropped the HSCIP for another lower paying index (Mid-Continent). Next came, Percentage of Proceeds (POP) contracts with pricing based on the Houston Ship Channel Index. These contracts by and large paid less in percentage and were loaded with deductions. Today, most contract pricing is based on the Pipeline Company's weighted average sales price (WASP) and are complete with past deductions and now include line loss. Line loss is defined as gas lost or unaccounted for within their on pipeline systems (averaging 8% - 30% per month). Line loss in my field lines averages is less than 5%. How can a pipeline company have 30%? With each change producers have borne the brunt and are paid substantially less. It has taken a while but nearly every pipeline company offers the same contract terms.
Page 1 and 2: STEPHENS ENERGY CORP. RANDAL M. STE
Page 3 and 4: months of excessive fuel+LUG deduct
Page 5 and 6: allocating LUG proportionately as r
Page 7 and 8: CONTRACT REVIEW BELOW OmnlCManenb ~
Page 9 and 10: - cM@#&g& May 29,2003 P.O. Box 1JC
Page 11 and 12: Re: - Due lo the changing industry
Page 13 and 14: inmhangubitity, subjc* to TXU GAS'
Page 15 and 16: "POINT DESIGNEE" (Nouca and invoice
Page 17 and 18: Auyst 13,2001 Re: 4^ Opnating Agree
Page 19 and 20: Imcrchmgeabillty, subject to TXU GA
Page 21 and 22: March 24, 2003 ~.06rmu B 1 T H b h
Page 23 and 24: 3.2 lbrthiagtothceon~bminconlaincdn
Page 25 and 26: RE: RoposedGasPmdmseAgrsmwt~CitoriO
Page 28 and 29: --- mu- OUlg.mn1PMI ~P-9gcofRwadsdP
Page 30 and 31: Unaccounted Gas (LUG), which is gas
Page 32: magically go away, and in& fa will
Page 35: a&essment of th-e bpe andlor Intern
Page 39 and 40: New Horizon Investments, Ltd. P.O.
Page 41: ~ ~ f ,316 El Dorado Drive Fc t Wor
Page 44 and 45: The logic of all this is, a long as
Page 46 and 47: u RUSSOI N. TAYLOR am Texas Allianc
Page 48: If -one hu read a Yn: eoatraec. h g

STEPHENS ENERGY CORP. - The Railroad Commission of Texas

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