I have a DO to complete for inherited minerals where we don’t have the lease(s). The DO includes deducts for oil production costs, which I am striking. It also includes deducts for gas after deducting compressing, treating, gathering, transporting and/or dehydrating and the disbursement costs. I’m apt to delete this too, but am I missing something here. Are these production costs reasonable for gas product? THX
If your minerals are in Texas, you cannot be required to sign a division order with language that differs from statute. Under Texas case law, the DO language can alter your lease terms until it is revoked. Look to see if the lease was recorded or ask the operator for a copy. This is important for your records.
Thx TDaze - asked and they have it buried in a paper archive someplace as it was purchased and declined to find it for me. Property is in New Mexico. I always include language that this doesn’t amend the lease, but since apparently nobody knows what’s in the lease…
Consider using the NADOA model form. NARO can probably provide the most recent update to you. I would not agree to any cost deductions unless the oil company provides the copy to prove costs are deductible. Was only a memorandum recorded?
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Thx. (1) I modified “certified” to “certified to the best of his/her/its knowledge” and changed the indemnity to “The undersigned agrees to indemnify and reimburse Payor any amount attributable to an interest to which the undersigned is not entitled which has been paid in the three (3) years prior to a claim by Payor to the undersigned.” Any issues with this that you see? (2) Do you respond on the Payor’s form by crossing out/editing, or do you throw theirs away and fill in your form with their details?
Are you making these changes to the NADOA form? I doubt the oil company will accept that. You are being asked to verify your DOI in order to be paid on that decimal. If you do not agree that it is correct, then you need to discuss that with the operator. After certifying the DOI, and it turns out that you own less than that interest, you will be expected to repay the overpaid royalties, most frequently by having current royalties reduced until the funds are recouped.
So, I can only judge the DOI by what they provide me and prior pmt stmts, which I know were not verified since 1980. And they won’t provide a copy of the lease. So, I’m left to simply confirm the DOI to the best of my knowledge, not certify. Further, they are the ones with the DOTO which they won’t show me, which is the only title work that exists. So, I feel like the burden is on them. And for me to cut off their look back is reasonable because they are in charge of tracking title, I’m not. If they want me in charge, then they have to give me info.
As to whether they’ll accept it, so far nobody has objected as they seem to just file it away. I’m not objecting to the DOI, and and do my best to verify the DOI through them by talking it through.
I understand your frustration with trying to confirm your DOl. However, it is your responsibility and burden as a mineral owner to keep detailed records, including deeds and leases, so you know what you own and how to calculate and confirm your DOI. It is based on your fractional interest in the minerals, the acreage attributable to well, and the lease royalty rate. All too often people throw away the records. Lots of advice on this site for how to create files for title, leases, wells, royalty income, etc. For New Mexico, you can download the pooling order, well permits, and other information from NMOCD. See if other family members have the deed and title history, earlier division orders or correspondence to share with you. How old is the lease? Older leases are almost always filed in full in county deed records. It is a newer practice to file a memorandum and it is essential for the mineral owner to retain a copy of the signed lease.
All fair comments, and I’m working to amass the info that dates to the 1930s on over 200 wells.
Notwithstanding that, the generally accepted practice to indemnify the oil producer without a cutoff strikes me as insane. I give them 3 yrs to find the defect or its on their head, just like many time limitations under the law. There is no law on this indemnity, only covered by contract. And in this case they are shoving it in a DO, which is odd since it raises the question of consideration. Regardless, a 90 year lookback? No - patently unreasonable.
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