These wells have been in production since about October 2011 and still waiting on DO. The following is the reason why. I'm not sure exactly what all that means.
I received this correspondence from Ellen Klimenko regarding a Division Order that I received. The division order was for the Welsh Unit 1H (016495 unit tract 4). I contacted her about the Wales Unit 1H and Wales Unit 2H. The following is part of the conversation we had. "Upon further review, it appears that you are in "suspense" because the entire tract you are tied to is in suspense, waiting on a supplemental title opinion for the Wales Unit 1H well (016497 unit tract 6). I see that you are also in suspense in the Wales A Unit #2H (016496) for the same reason - waiting on a supplemental title opinion. The entire tract 6 is in suspense. You are also in suspense in the Welsh Unit 1H (016495 unit tract 4) for the same reason. The entire tract of owners is in suspense. Normally we do not send Division Orders out until owners are released.
We are mineral owners in Montague county and also dealt with Ellen Kliminko. She told us the same thing after waiting for 2 years after we signed our lease, for a payment. It turned out that EOG had been producing from our wells for 2 years and just used the money without paying us a royalty and it took us a long time to collect. I understand they use the "suspense" excuse as a way to use the money without paying the royalty. We found these people very helpful, royaltyownerreport.blogspot.com
This means that there is a title issue pertaining to the tract in which you have an interest which is precluding the operator (EOG) from determining how the interests are spread among the various interest owners (of which you are one). Once they have a supplemental division order title opinion prepared they will distribute the funds dedicated to the tract in which you have an interest that have until now been suspended.
I and my family are also owners in Montague Co. EOG has been producing ours since Mar 2011 and has been selectively paying royalty. I think this title problem is just an excuse to withhold the payments for a time. Much of our title work was done when the original leases were signed. We in turn have produced any and all title work asked for by EOG. We have over 40 share holders and I have done the research to identify each relative as to actual ownership and shares owned. I have provided this info. to EOG several times but they always seem to come up with more excuses. I do think we will eventually get our money but when??
I also have other relatives in other leases who are experiencing the same problem and know of other shareholders in the Salona area who are in the same situation.
This is why payment of royalty, along with a broad disclaimer of warantee of title and the lessee leases at his own risk, should be a condition of the lease, no royalty, no lease.
Generally speaking, failure to pay royalties will not result in forfeiture of a lease, unless there is very specific language in there. It is often hard for people to financially justify hiring a lawyer because the royalty income in dispute is often small, but it is always a good idea to get as much help as you can, even if the pay off is much farther down the road. People need to remember that these gas wells could be there for a long time.
Pound Printing and Publishing 4/76 Paid Up 640 acre pooling with the only added clause being a forfeiture of lease if royalty is not paid timely, making it a condition of lease.
This lease is a 3 years paid up lease and the faux pas happened in year 2. Does the initial payment to pre-pay a three year lease trump the condition of lease, given that bonus is in the nature of pre-paid royalties (at least by the Feds)?
Do you have a case to cite to support your conclusion?
James O'Sullivan said:
Generally speaking, failure to pay royalties will not result in forfeiture of a lease, unless there is very specific language in there. It is often hard for people to financially justify hiring a lawyer because the royalty income in dispute is often small, but it is always a good idea to get as much help as you can, even if the pay off is much farther down the road. People need to remember that these gas wells could be there for a long time.
It seems logical to think that EOG is holding out on the initial DO and royalty payment for greed or some other reason. My question is what does it gain EOG to do that as they have to pay from the initial day of production anyway. Isn't the reason of "suspense for reasons of title interests" be legitimate? Don't they have legitimate reasons for doing what they are doing?