What is “Distribution interest” . Is it different than Owner Interest?
“Theoretically”, they are supposed to be the same thing. I have some operators that have them as identical decimal amounts. I have a request into the operator that does not keep them identical. Will let you know what I find out.
thanks so much for your help!!
I’m also interested in this question.
A new operator took over and the EnergyLink statement called the decimal interests ‘owner interest and distribution interest’. On the check voucher from the operator the column, Distribution Interest was called Payment Interest. The royalty was calculated against the Distribution/Payment interest. In my case this is an old gas well that has changed hands several times. In the early days of my involvement there where deductions for production costs but now the only deduction is for transportation. My guess is that the Distribution Interest is a less transparent way of recovering production costs??? I can’t figure out how they calculated the Payment interest??
You should contact the operator and ask why he decimals differ. If they do not respond to email questions, then send a certified letter. One possibility is that some other company owns a part of your lease and has opted to take its share of gas in kind and has told the operator that it is assuming responsibility for that share of your royalties. In that case you need to send a demand letter to that company and ask for an accounting and payment of your royalties. Another possibility is that the larger decimal is calculated on the tract basis and the smaller decimal is based on the larger unit acreage. A payment on the unit decimal will be on 100% of production and payment on the tract decimal will be on volumes allocated to the tract. The net result then will be you are paid in full. Finally, the name designation for costs on your check may include a variety of costs which are not being separately listed. Some operators net the costs out of gross revenues so it looks like there are no charges but you are still paid less. You can only determine this by finding out what true gross sales were.
I have emailed the company as we are waiting for an answer to our question before we send in their new division order. Thanks so much for your help!!
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