I purchased some property about 9 months ago that has current production. My purchase included a small non participating royalty interest. Several different oil and gas companies are "in the mix" and I have recently received Division Orders that reflect the change of ownership (my purchase) and I know that Division Orders were also received by the seller of the property. One Division Order shows an effective date of our purchase (date of Deed); however, another company shows an effective date very recent. When I questioned the effective date - because I want to make sure I receive payment for production that has happened since my purchase - the company responded that the recent date is the "industry norm". They offer no suggestions on how (or if) I will receive payment for production between my purchase date and the effective date of the Division Order. Any advice is much appreciated. thanks
Joe,
When you get a royalty payment, check to make sure the payments go back to first production or the effective date of the "Deed" whichever is the latest date. Concerning the deed, check to see if you have a warranty deed or special warranty deed depending on the overall transaction.
With regard to the oil company's response, it is possible that the recent date is the date in which they received notice of your purchase (I did not see reference to such date in your post). Often leases will provide that any assignment or transfer of an interest is not effective as against the lessee until it is provided with a copy of the transferring document. Therefore, some oil companies will make the Division Orders effective as of the date they received documentation of the transfer.
I concur with Gary that you need to review that first check and then question the company again if it does not reflect your purchase date.
Based upon communication with the company, my first check will not reflect production from the purchase date. Is the lease still the governing factor although I have an NPRI only? Many thanks
Joe, That may mean that the company policy requires they issue a Division Order to your Seller. Have your attorney request an assignment of mineral revenue from date of first production from the seller. Or similar document waiving the sellers rights to income in accordance with the purchase an sale agreement. It should be notarized. Send it certified to the operator(s) involved. That will allow the revenue clerks to put you into pay status. Most likely the legal cost will be worthwhile economically.
Gary Hutchinson.
Joe Gabriel said:
Based upon communication with the company, my first check will not reflect production from the purchase date. Is the lease still the governing factor although I have an NPRI only? Many thanks