RWK,
August 2011 I signed a fixed fee lease, 3yr Paid Up Oil and Gas Lease with 3/16th royalty with XTO Energy Inc. on TW 146N, R96W parts of Sections 1, 12, 13, 23, 24, 25, 26, and 36. Prior to signing I provided a completed Affidavit of Heirship of my father. I have now received another request from XTO (thru Bakken Oil) wanting another AOH to provide Marathon Oil Co 'to the mineral interests acquired from the dissolution of Holco Co. Inc.'. The letter states that MOC has several producing wells under my leased acreage to XTO and for MOC to recognize and make royalty payments to the successors of these interest, certain curative instruments must be obtained and recorded in Dunn County to proved a complete 'chain' of succession to said interest. The AOH is only for Sec 25 and 36.
Is this standard procedure or common place?
Your thoughts and comments, and any suggestions are appreciated.
If they will pay you based on an AOH, run, don't walk to get it done. Record the affidavit of heirship request a certified copy along with the return of your original AOH and forward the copy to Marathon before they change their mind. You don't want to have to perform a costly and time consuming probate.
The bad thing is that you may receive a request for title curative documents to make the oil company feel secure in their title to your oil but they still won't pay royalty until you complete a probate and you would then have jumped through the AOH hoops and lost time for nothing, you won't know which it is until you receive that first check or another curative request.
Greatly appreciate your thoughts and quick response.
My father never new about these mineral rights. My attorney handled his Living Trust when he moved from FL to AZ. My sister is deceased with 3 children and I am the only remaining sibling from my father and mother. I am quite sure the attorney filed for public notice but am not sure about probate as everything was covered in his Will and Trust. (I was the Personal Rep for his trust.) I will schedule a meeting with the attorney. Anything else I should ask or obtain from him?
r w kennedy said:
If they will pay you based on an AOH, run, don't walk to get it done. Record the affidavit of heirship request a certified copy along with the return of your original AOH and forward the copy to Marathon before they change their mind. You don't want to have to perform a costly and time consuming probate.
The bad thing is that you may receive a request for title curative documents to make the oil company feel secure in their title to your oil but they still won't pay royalty until you complete a probate and you would then have jumped through the AOH hoops and lost time for nothing, you won't know which it is until you receive that first check or another curative request.
Ok, the trust changes things somewhat, are they just looking for the AOH for you personally or as trustee? I thought it might be unusual that you were being paid to begin with based on an AOH, the trust would explain that.
Yes, XTO is asking for my fathers last Will and Testament and documentation showing he had a Living Trust. None of this will be hard for me to provide. The letter I received from Bakken Oil (representing XTO) references TAT State 14x 36 well. After XTO gets this info and provides it to MOC, what should I expect going forward regarding royalty payments?
Again, your thoughts and appreciated.
r w kennedy said:
Ok, the trust changes things somewhat, are they just looking for the AOH for you personally or as trustee? I thought it might be unusual that you were being paid to begin with based on an AOH, the trust would explain that.
The current production is 202,935 barrels oil, I would expect a big fat check. I also suspect you are going to have a battle to get the interest. If you were in pay status before and nothing has changed, I believe you are entitled to interest and possibly they are trying to sham up some kind of title dispute to not pay the interest, in which case I would not give them anything but what is already of record and contact my lawyer.
I wish you would give the background up front, things change with the additional information of the trust. What is of record in ND may be critical to obtaining the interest I believe is due you.
The production being decently high and the royalty being 2 years behind, that means that the first full year has accrued 18% and the next 6-7 months have accrued a great deal of interest, although not as much. The last 150 days will carry no interest. This is enough money to try to do you out of it If you have more than a very few acres.
Sorry about leaving out the beginning info.
The oil and gas lease on the Sections previously mentioned contain approx 2000 Gross acres with Net acres of .2198. In my mind this seems like a very small amount of acreage. Also, my lease is suppose to expire August 2014. However it looks like the lease 'remains in force as long as operations are being contentiously prosecuted on the premises or on acreage pooled therewith.....' I do NOT have each section leased individual. They are all on one lease with no Pugh Clause.
Can you provide me a very conservative estimate of the accrued interest you mentioned?
Do you feel my holdings are worth getting an attorney involved to check what is of record in ND,or is that something I can do? How would you recommend handling forth coming negotiations with MOC?
0.2198 net acre would be a very small interest, even with a good well in such a sweet spot. I am going to reverse myself yet again and say you should not retain a lawyer because it's unlikely you would recover more than he would cost to get the interest owed. I would still request the interest and raise a ruckus if i didn't get it.
If you had even a few net acres, I would say a lawyer was worth it.
You are correct that your lease and the spacing is HBP and there will be no more lease negotiations.
How would you suggest I request the interest? Should this request be to XTO or MOC prior to completing and providing the AOH to XTO? Because the .21 is such a small acreage will it be placed in a 'pool' of other small lessors which allow MOC to delay any royalty payments or is MOC required to pay within a certain period of time? Is there a method to figuring a conservative guesstimate of the royalty amount for the .21 acreage? Sorry that some of these questions may be basic but I am trying figure out what to do going forward. Again, thanks for your input and time.
r w kennedy said:
0.2198 net acre would be a very small interest, even with a good well in such a sweet spot. I am going to reverse myself yet again and say you should not retain a lawyer because it's unlikely you would recover more than he would cost to get the interest owed. I would still request the interest and raise a ruckus if i didn't get it.
If you had even a few net acres, I would say a lawyer was worth it.
You are correct that your lease and the spacing is HBP and there will be no more lease negotiations.
The law says the operator must pay within 150 days of first sales or the operator owes interest on past due royalty payments, unless there is a title dispute. If you had good title all along, they owe you interest.
I would demand interest of the current operator if you have not received any payment at all for the well in question. I would ask for the interest when you receive your first check if the interest is not on it. Send a registered letter to the legal department of the operator.
I believe that the affidavit of heirship request may be a maneuver to try and make it look like there could have been a title dispute, which you admitted by providing curative documents, so now they can pay you without paying interest.
You have not said but there may be others involved, presenting a united front may help.
The only others involved in this from my family, are my deceased sisters two daughters and son. Their combined net acreage is the same as mine (.21). I told them at the time I signed the lease (Aug2011) that this is not a 'big deal' and their children MAY see some financial benefits. I don't know what would cause a title dispute as they each signed a lease and received a payment. However, I would like to make sure I am doing what I can to get what is coming to all of us. Your thoughts?
I will send a registered letter to XTO's legal department requesting interest on royalties. Do I need to specify the 14x 36 well or should I reference all production in sections, parts, and parcels on the lease?
Thanks again for your thoughts and comments.
r w kennedy said:
The law says the operator must pay within 150 days of first sales or the operator owes interest on past due royalty payments, unless there is a title dispute. If you had good title all along, they owe you interest.
I would demand interest of the current operator if you have not received any payment at all for the well in question. I would ask for the interest when you receive your first check if the interest is not on it. Send a registered letter to the legal department of the operator.
I believe that the affidavit of heirship request may be a maneuver to try and make it look like there could have been a title dispute, which you admitted by providing curative documents, so now they can pay you without paying interest.
You have not said but there may be others involved, presenting a united front may help.
You may need to reference the specific well you have not received royalty from and from which you are owed interest. Each well is it;s own economic entity. Even if the spacing and lease is held by other wells where the royalty was timely paid and the royalty is continuing, the operator has only 150 days after first sales to pay royalty from each individual well or they owe interest, except when there is a title dispute.