Southwest Royalties in Midland, Tx has begun operation some old wells previously operated by Chevron. The wells were originally drilled in 1980 by Alan Antweil in Sec 5-T20s-R38E. The only remaining wells in production are the Louie #2 and Dewie #1 and until Southwest decided to charge a “gas marketing charge” generated a very modest revenue stream. For the period starting 9/21 through 1/22 gross revenue was $373.22 with gas marketing of 114.63 (30.7 %) The lease that I signed back in 1980 provided a 3/16 royalty with products delivered to the well. For the first 40 years of production there were no “marketing” deducts. My last check from Chevron did not have any marketing deduct. There is not enough money in this situation to warrant hiring legal counsel but what does one do to prevent a scoundrel from taking advantage of something like this? I bet I am not the only person who has this experience
Most cases involve small holders. Your correct, it is often not worth fighting on an individual basis. That is why there have been so many class action lawsuits involving unauthorized deductions. You may want to visit with a Texas attorney for you options.
This post is not legal, investment or tax advice, it is for discussion purposes only. Reading or responding to this post does not create an attorney-client relationship.
Archie - your last check from Chevron may not have listed the marketing deducts, but they were likely still charging the marketing deducts and other deducts by claiming a lower price received from the gas. We have some Lea County interests that were taken over from Chevron by Southwest Royalties and our checks actually jumped by 20% or so.
My experience has been that all the operators screw the mineral / royalty owners. The only difference is how they do it and how much they get you for.
I have a not totally dissimilar situation in that what the operator is taking is undoubtedly wrong, but it’s not valuable enough for a full fledged lawsuit. Several of my extended family members would also be concerned but having come to the end of one lawsuit, they probably don’t want to start another. The best I can think of at this moment would be small claiims court. Southwest Royalties would hate that. It would cost them more in research than it’s worth or they would come in unprepared and lose if you are correct and prepared. They have you over a barrel because it’s not worth a full fledged lawsuit, but to some extent I think that would be turned around in small claims court. I haven’t done all the research I need on this small claims court idea because I have several other things more valuable I’m working on at the moment. I am very disgusted with Ovintive and my attention will be fully on them one day. Not disgusted enough for a full fledged lawsuit where it would take 20 years to recover the legal fees but disgusted enough that I would pay a lawyer to prepare me for the small claims court. It’s the best I can think of right now.
Small claims courts might or might not have jurisdiction to determine underpayment. It is a novel idea. Often a party can remove a case from small claims to a more formal “pleading” type of case.
This post is not legal, investment or tax advice, it is for discussion purposes only. Reading or responding to this post does not create an attorney-client relationship.
I have now been able to make contact with SW Royalties who informed me that they were not provided Chevrons payment information, only the Listing of people to be paid. They are having to work through each lease to determine just what the appropriate deducts should be.
I know there are no deducts provided for in my lease, only those legally required by the NM or Feds, so I have sent them a copy of info in the 1980 lease document pertinent to the discussion.
As of now I am to be reimbursed for the improper deducts with my next check. The SW rep appears to be on top of this situation so we will see.
I will report if/when I have been successful. Meanwhile, anyone receiving royalties from SW needs to carefully review their documents.
I have heard of people taking the issues to small claims court. While the oposing party possibly could take the matter to a formal court, that would cost them money. If they are stealing a few dollars, I doubt they would want to spend tens of thousands. They would be shooting themselves in the foot.
Glad to hear you got it worked out (hopefully).
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