Relative who died in 2002 held royalty deed granting her .00005533 interest in all of seven sections of land in Midland and Martin counties in TX. Proved heirship by my sister-in-law and myself to TX Unclaimed Property and received payouts of escheated funds. Proved heirship to Pioneer Natural Resources and received Div Order. Since SIL and I each inherited 50%, I think my royalty interest should be .00002766 except where pool size or horizontal drilling would reduce that interest. Is there any legal/logical reason my interest would exceed .00002766 on any well? Most of the 55 wells listed on the division order show higher interest number than my inherited amount. I have determined that 113 wells have been produced on the parcel in which I have interest and many producing wells are not included in the Div order. Order Analyst and her supervisor have been non-responsive over the past 12 months in either clarifying or correcting Div Order. How does one resolve this?
Welcome to the forum. The best thing to do is contact the Division Order analyst by certified mail for one or more of the wells that is higher and ask the analyst to walk you through the equation for the well and how they got the different amount. You may be confusing the decimal interest for a particular well with the actual percentage of ownership listed in the royalty deed. State law requires that they answer a certified mail request.
Thank you for the response. I may, indeed, be confused. The Royalty Deed shows a fraction of a fraction that when solved comes out to .00005533 (confirmed by other legal documents). I inherited 50% of that which I believe should be .00002766. On the division order, the first 2 of 55 listed wells are shown with an NRI which I understand to be net revenue interest of .00005533. I know a royalty interest may be reduced when calculating NRI, but I have not been able to find anything that explains how it can be increased to twice the royalty interest. Attempts to express concern or get clarification simply resulted in statements that we had to sign the offered division order to get on the pay list.
Is it possible that they have not included the split with your sister in the equation? Is she getting the same DOs? Did you both possibly inherit from another relative as well which would double the royalty decimal?
My sister-in-law’s division order is identical to mine with respect to the wells and NRIs listed. There are no other relatives from which we may have inherited. Blanche Margro is the royalty owner stated in the 1950 Royalty Deed. I have searched Midland County records and downloaded all relevant documents in her name and also searched based on the 2 married names she had ( White and Sylvest). I have searched for names of other relatives and found nothing.
Just thinking out loud, but if DO was for two wells, maybe this is where the factor of two came from. Also, I have seen cases where multiple depths come into play, so theoretically at least, there are times when the decimal interest is more than the deeded royalty.
At this point, I would sign the DO and accept the funds. If they figure out that they made a mistake, they will put you in temporary suspense until they recover the accidental difference amount. But take the funds for now. You could segregate half of the them and put in a savings account and make some interest on them if that would make your feel better.
Thank you for your continued responses and information. The first well in question is API 329 39124. When I look at RRC records, I see the depth is 10891 feet, but I do not see any indication that there are 2 wells at the same spot or multiple depths. Am I missing something? I was trained in Oil and Gas accounting - almost 40 years ago, and I am sure I have forgotten a lot, not to mention not being up to speed on changes over the years. From a logical perspective, it seems to me that if I have a non-participating over-riding royalty interest, that interest is supposed to be applied to the revenue from the well before expenses. Since revenue is based on the units of product times the price per unit, it would seem to me the presence of multiple depths would already be factored in and not affect the royalty interest. I was always taught to not sign anything I don’t understand and was concerned that signing the div order had me in the position of making a false claim. I sent an objection by certified mail back in July and received only further insistence that I had to sign the offered div order. I have now signed and submitted the div order and hope I have not hurt myself. I am concerned about the other producing wells that I have interest in that are not on the division order.
Request a division order for the other wells. Send by certified mail. Tell them that you are updating your records and want copies for each of the wells. See if they respond.
min4me, there are two wells on the Erwin ‘45’ lease, RRC 45524. 329 39124, which you mentioned, and 329 39368. Maybe this bit of information will help.
We plan to take this advice once we are on the pay list. Thank you for the suggestion.
You are correct. There are two wells in the lease, designated as Erwin 45 #1 and Erwin 45 #2, They are the first 2 wells listed on the division order and both are listed with a NRI of .00005533.
If the last “fraction of a fraction” is a “1/8th”" you could be in a situation where your royalty is calculated based on a 1/4 royalty rather than an 1/8th. That would double your interest. It is a little complicated, but there have been some recent decisions on the way royalty deeds are interpreted.
Thank you for the suggestion. Is there a source of information you can refer me to that provides some explanation? The last fraction on my royalty deed is, indeed, 1/8, but that deed should apply to all 55 wells on the division order, so I am left wondering why this factor only affects 2 wells.
Research “Fixed vs Floating Royalty” in Texas. There are several presentations available online. It might be your situation.
Thank you for that reference. I have researched several of the listings I found and can’t see that this issue applies to me. One of the reasons, I don’t think it applies is it seems that if the issue applies to one well, it should apply to all wells? My royalty interests stem from a royalty deed dating back to 1950 and covers 4815 acres in Martin and Midland counties. According to RRC records, there are 113 wells drilled on this acreage (all produced by the same company), but only 55 wells are listed on the division order I was supplied. 2 of the wells are listed at twice the royalty interest I believe I own based on the deed and inheritance. About 12 of the wells are below the amount because they are horizontal and incorporate land I do not have royalty interest in. None of the other wells matches the expected royalty interest - many are off by .00000001, or .00000004. I recognize such small discrepancies are probably insignificant, but don’t understand the deviations.
I would not worry about a slight decimal difference out at the 8th decimal. Probably a rounding issue or a small discrepancy in acreage.
Ask your operators for the equation that created any interest where you have question. Usually this is a fairly simple request that can be made through royalty owner relations. That will remove the variables and hypotheticals. Keep in mind the deed form for your royalty interest is unique because the interpretation of it has likely changed over time. It can create interesting situations.
Martha is correct about not worrying about very small variances. Rounding errors happen
You should have an oil and gas attorney review the original royalty deed in light of the recent Texas case law decisions. The 1950 deed cites a fraction 317 / 716155 = 0.00044264, which when applied to existing 1/8th royalty leases equals 0.00005533. If you inherited 50%, than your DOI would be 0.000027665. However, the deed also contains additional language referencing the “usual 1/8th royalty” and language referencing 317 / 716155 of 1/8th of oil and gas and 317 / 716155 of gasoline and products. Interpreting deed language can be very complex. The deed makes it clear that you do not the right to execute leases and your interest is really an NPRI. It may be possible that the deed grants 317 / 716155 of the lease royalty and so for new 1/4 royalty rate leases, you are entitled to one-half of 317 / 716155 X 0.25 = 0.0001106604, resulting in your share being 0.00005533 royalty decimal. If that is the case, your question should be whether there more wells under newer 1/4 royalty leases and you are being underpaid on some wells.
Thank you, all, for the continued responses and information. I now understand how a subsequent lease could increase the base rate cited on the royalty deed.
I am not concerned about the .00000001 and .00000004 differences, but have been concerned that none of the listed wells showed my expected rate of .00002766. Yes, I realize that my 50% is technically .000027665, but if that rate applied to both my SIL and myself, it would result in an over payment. So, I expected the truncation to 8 digits as proper. My concern with the 2 wells that were twice my base rate was that it would cause the division order to be interpreted as pre-division (due to inheritance) values and thus result in royalties about half what I should receive on the other 53 wells.
My far bigger concern is that my RRC research shows 113 wells, but the division order only lists 55. The 55 wells that are listed do not include 13 wells in production to which I should be entitled revenue based on the royalty deed. I am waiting to be placed on the pay list to send a certified letter addressing those 13 wells. After that, I will try to address the other 45 wells that I have an interest in.
Question 1: If I have a question about a well such as Erwin 45 #1 that is a part of a lease #45524, is there a straight forward way for me to search and find the terms of that lease in County records? Since I have a non-participating royalty interest from an inheritance, searching on the relatives name does not find that info. Searching on the producers name brings up more info than I can wade thru.
Question 2: The division order I received that lists 55 wells, includes wells that are listed as not producing, shut-in, producing, etc. Based on that should I expect to see all 113 wells on the property listed or is there a reason some wells should not be included?