150% Payout Threshold Delaying Oil & Gas Lease Being Credited

North Dakota - McKenzie Co Twnsp 146N Range 98W
Section 11 POJORLIE 21-2-1H Last Royalties Received 12/23/2022 because I placed the Owner Account In Suspense

My family was previously receiving royalty payments from Continental Resources through my late fathers Trust. The monthly amount received was not only around $50 to $60.

I put the Owner account into suspense so that I could transfer the mineral ownership to the individual trust beneficiaries. Prior to the transfer however I found out that the Trust did not actually have an Oil & Gas Lease with Continental Resources. This was a surprise to me. I was advised to obtain a lease before transferring the ownership.

When I reached out to Continental to try to obtain a lease for the Trust they declined. I was eventually able to obtain a lease from Phoenix Capital Group Effective 12/18/2023. Subsequent to signing the lease the ownership of the minerals has been transferred. Continental Resources was provided all documentation regarding both the lease & the new ownership.

It has been 2 years since any payments have been received. When I reached out to them I was told that their records have been updated & that I now have my own individual owner account. Several months ago I questioned why I have yet to receive any royalty payment from current production or my share of the Trust funds that were placed into suspense. I was told that my owner account has not reached the $50.00 minimum balance. As I continued to try to understand how this could be based on the fact that it has been 2 years since a payment was made I have now been told that the oil & gas lease with Phoenix Capital Group would not be credited until the well hits 150% payout threshold. They cannot tell me when this will occur.

Has anyone had experience with this type of situation? Any input anyone could offer would be greatly appreciated.

ND has statute dealing with unleased mineral owners. It appears that unleased minerals are entitled to divided parts of (1) royalties (weighted average or 16%) and (2) cost bearing interest. Cost bearing seems to be working interest (WI), so either you pay drilling and well costs up front or you are delayed until payout (well revenues exceed costs). Here operator says payout was set at 150% of expenditures. So your father was in pay in part for royalties. His royalties would decrease as well production volumes decline, in addition to being subdivided among the heirs. By signing the lease, your status has changed from unleased to leased mineral owner. It may be that the lessee has opted not to participate by paying the well expenses and your royalties are being applied against those costs. And since you are no longer unleased, you may no longer qualify as an unleased mineral owner under the statute. These are only guesses as I am not familiar with ND law. This is really a question for the ND oil and gas attorney who advised you on the lease terms. https://codes.findlaw.com/nd/title-38-mining-and-gas-and-oil-production/nd-cent-code-sect-38-08-08/

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