July 25
12%, 6% if there are marketable title issues.
Note: The 6% rate will change to the prime interest rate for payments due after 1 Nov 2018. Not a big change as it is currently 5%.
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A reply to me from a Roan Resources Division Order Analylst concerning well in 14-9N-5W in Grady Co. “We are currently waiting on the Division Order Title Opinion covering the below mentioned well. Once we receive title we will set up the owners in our system and issue division orders”
What would be the hold up for the Division Order Title Opinion?
There can be hundreds of mineral owners in each section. The title has to be searched back to patent (original granting) for each person or entity. It takes months! Also, Roan is a new company built out of two previous companies, so they may be staffing up and getting software, etc. set up. If they are late (past six months after first sales), they will owe interest of 12% for clean title and 6% for ones that need clarity. Win -win.
Thank you, Martha. At least we know they are working on it. You’d think there would have been previous title opinions so only updates needed. Or that the new company would have obtained records from the old company. We have a very small interest (2.5 acres) but it’s the only one active for us right now so watching it closer than really necessary. And passing on info in case others would be interested. Learning new things all the time.
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The leasing title opinion is usually a less rigorous title opinion than the Division Order title opinion and can be done fairly quickly. Leasing money is so small compared to royalty money, any mistakes are not as critical. The Division Order title opinion is take much more seriously and is done in depth (but can still have errors-hopefully fewer) since the royalty payouts are in the millions of dollars. The Division Order is basically a contract and the operator really wants to make sure they are paying the correct people/entities.
As I understand it Title Opinions can be costly and general are not made public or pass along for free. And because they are owned by the Oil Company can not be released to the general public and certainly not to a competitor.
I have tried to obtain a sigiture from a oil company on matters concerning a lease and it is almost impossible without going thru all kinds of lawyers.
They will sometimes give you the paragraph of the title opinion that pertains to your title only. They will not give the whole thing out.
Received DO end of last week. Sent in this week. It’s been 10 months since first production in Dec. 2017.
The important date is first sales, not first production. If your first check is more than six months past the first sales date, you should request the statutory interest which is 12% for no title issues and 6% is title needed to be cured. Send it by certified mail. (The six months might be fuzzy by a week or two since different companies cut their checks on certain dates. If first sales misses the check date, then it will get picked up the next month.)
Thanks - I contacted Roan Resources in August by email to inquire about not receiving a DO. They told me then they would put us on a list to receive interest payment. We didn’t see a first sales date on the DO. It just says the DO is effective Dec. 1, 2017. We’ll know more when we get the first check. But in the meantime maybe sharing this info will help others in that section. I found the Production History on the OTC PUN site: Production History 2018 February 1 16330.3 COFFEYVILLE RESOURCES REFINING & MARKETING LLC 23896 2018 January 1 24090.79 COFFEYVILLE RESOURCES REFINING & MARKETING LLC 23896
1 = Crude Oil 3 = Reclaimed Oil 5 = Natural Gas 6 = Natural Gas Liquids
Gas volumes are reported by MCF (thousand cubic feet) produced. Oil volumes are reported by the number of barrels produced.
My siblings and I finally received a division order this week from Roan Resources for this well / section. The Royalty Interest listed is not correct for me or my three siblings who were also listed individually on the division order. Is it common for the Royalty Interest to be incorrect on division orders?
We are sending the division order back with the location (book and pages) our lease was recorded in Grady County. Is there something else we need to do to get this corrected?
Thanks in advance
HI Larry:
There is more to your interest than just the Oil & Gas Lease. I would first ask them for information on how they arrived at your interest. This should include your net mineral acres, royalty, unit size & if a multi-section horizontal well, your section’s percentage of the unit.
In this case, it appears as though this well is for a 640 acre unit. So you take your net acres, divide by 640 and multiply time your royalty percentage. This should be your net revenue interest as shown on the Division Order. Make sure you have “marketable” title to all of your interest. If not, is there a notation on the Division Order showing that title curative measures are needed to vest you with all of the interest you believe you own.
And yes, Division order analysts are human. Mistakes are made.
Good Luck.
Todd M. Baker
Todd,
Thank you for the quick response. I calculated my interest in the manner you described and it is different than what is on the order.
In our communication with Roan they said they still showed our interest in my father’s name. He passed away over 20 years ago. I provided Roan with a copy of his death certificate and a copy of the ‘Order Allowing Final Account Determination of Heirship and Final Decree of Distribution’ which was filed in Grady County. Is there something else I should have done to properly obtain “marketable” title for our interest?
Thanks,
Larry
Larry: That is what you needed to do. Sounds like the difference may be in the net mineral acres that you believe you own versus what Roan believes you own. Double check with them to see how many acres they are showing you own.
Thank you for the information Todd, it was very helpful!
It appears this may be our property per court documents that are awaiting probate from inheritance. Totally new to all of this…what is this worth? can anyone shed some insight on this for us?
Michael: Welcome to the forum:
I’m not sure that I understood this. Often individuals own a fractional interest in minerals. If the probate is outside of Oklahoma, you will likely be required to obtain an order from an Oklahoma Probate Court.
What is this worth?
In Grady County, it is not unusual for an acre mineral interest to sell for upwards of $20k or more depending on activity.