My elderly mom received the first royalty check in June 2016 for production from September 2015 through April 2016 for her small interest in the above referenced lease. The amount was far less than I expected so I checked the volumes reported to the RRC and the Texas Comptroller websites. The production reported on these public sites matched one another exactly and were far greater than the production detailed on the BHP check stub.
BHP included royalties on only 9,339.50 BBLS of the 106,562 BBLS that were shown on the RRC report as oil/condensate disposition code 1 (Truck) for this six month period. Likewise BHP included royalties on only 36,312.04 MCF of the 42,723 MCF reported as "gas delivered to a processing plant" during this same period. This gas volume excluded the 9,520 MCF that was deducted for gas lease or field use and the 190,388 MCF that was flared.
The July 2016 royalty check just arrived for oil/condensate production in May 2016 and this time the production of 8,566 BBLS matched the RRC and Texas Comptroller volume exactly. The gas production was entirely deducted as gas lease or field use (4,774 MCF) and flared (25,305 MCF).
My questions follow:
(1) Does anyone have an explanation for the apparent discrepancies in the initial RRC royalty payment?
(2) Could the initial lease signing bonus check have been an advance against future royalties?
(3) Are the "gas lease or field use" and "flared" volumes noted above typical amounts for these type deductions?
(4) Has anyone else had similar experiences with BHP at this well or elsewhere?
Any input would be much appreciated as I am learning on the fly and I'm trying very hard to represent my mom's interest in a responsible manner. Thanks!
Our checks showed the same discrepancies. After we received the July check, I emailed BHP to ask when we are going to get paid for the condensate that was sold for the six month period. I am waiting for a response from them.
Thanks for the reply Jeffrey. My mom's check stub only listed condensate sold in the month of April 2016 and each of the previous 5 months had considerably greater verified production and disposition volumes than April. Something definitely seems wrong here. Please let me know if you get a reply from owner relations at BHP. I plan to also e-mail them soon. I was hoping to hear from others who may be able to enlighten me further. Regards.
I received the following response from BHP today: We have looked into HT 504810 and saw there was a deck change to 501. During this process not all the oil products were picked up the first time. We have made adjustments for owner to get paid on the oil products from NOV15 through MAR16. Owner should expect payment in the next check write process in August. We hope this satisfies your request, however, if you have additional questions please contact the Owner Relations Department
Very good... thanks Jeffrey. I will e-mail them as well to be sure that mom gets her royalties. Did you send your request while logged into the secure PDS Energy - BHP Billiton Owner Relations web page or did you just send it from your e-mail server to the e-mail address on the check stub?
I'm grateful for the public sites where we can verify production and for this forum where we can communicate with other owners. Best wishes.
Honestly, I don’t recall. Either site should work. It took over a week to get a response.
Jeffrey, I received a reply from BHP today in response to my inquiry and they will also be making corrections to mom's royalty payments for the first 5 months of production. I have to wonder if they will be reimbursing the other owners in this well site who haven't taken the initiative to question them.
They also responded to my questions about the gas production. I have including excerpts from the BHP response below to benefit you and others who may have been affected similarly.
We have looked into HT 505885 and saw there was a deck change to 501. During this process not all the oil products were picked up the first time. We have made adjustments for owner to get paid on the oil products from NOV15 through MAR16. Owner should expect payment in the next check write process in August. Please see the answers to the questions below:
(1) When can mom expect to receive a royalty payment for the additional production/disposition from November 2015 through March 2016? Answer: Check should be mailed out in August with adjustments.
(2) Why has virtually all of the gas production from December 2015 through May 2016 appeared on the reports as "gas lease or field use" and "flared" deductions? Answer: The gas from December 2015 thru May 2016 appears as “gas lease or field use” and “flare” because the well did not make a gas sale due to the Ramsey plant explosion. The plant will be back up soon, and currently the gas is being flared from the plant.
(3) Should mom expect the gas production to once again be marketed and generate additional royalty income in the future and if so when? Answer: Gas should start being processed in June 2016 Production period.
We hope this satisfies your request, however, if you have additional questions please contact the Owner Relations Department
Thanks,
BHP Billiton
Thanks for getting answers & sharing the info! I’ll pass it on to all the owners that I know.