This will sound pretty stupid, but here goes.
I got a Chapter 11 letter for Midstates Petrol Co, Case #16-32237 (DRJ)
It was addressed to me, but seems to be a generic notice without any references to what land it is addressing. No land descriptions, or identifying numbers at all. It comes with a
"US Bankruptcy Court Southern District of Texas Creditor Registration Form for Electronic Filing and US Bankruptcy form with 3 parts.
Here's where I am lost....I do not recognize the name Midstates Petrol Co on any of my land info. I have leases in Woods Co, Alfalfa Co, Cleveland Co, and Ellis Co, Oklahoma. None of the checks I get from any of these are from Midstates.
Can anyone help me figure this? Or, has anyone gotten anything from Midstates besides me?
Hi Shelly!
It may be that Midstates Petrol (Petroleum?) Co is Operating the Well or Wells you own an interest in but your checks are coming from the company(ies) that are buying the products. That is not unusual.
I suggest you call Midstates and ask them which of your properties are affected. They should be able to tell you in a matter of minutes.
And you should fill out and send in the Creditor Registration Form. Wouldn't hurt to consult an Oil and Gas Attorney familiar with Bankruptcy matters either. If you don't file a Claim, you may be considered any Unsecured Creditor by the Bankruptcy Court and only end up with a small percentage of the royalties owed you.
If you need an Attorney, I can provide you the names of a few. Just accept my invitation to become A Friend on The Forum and I will send you their contact information.
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
I have the same problem with SandRidge Energy...received the Ch 11 bankruptcy documents, including the form 410 (claim form) in a separate mailing. I have searched records 10 years back and find no trace of being paid by SandRidge Energy, Calling the bankruptcy hotline was of no help. Could anyone advise us on why we are receiving documents from companies which we can not trace direct revenue?
Hi, Sheri -
if you have received paperwork regarding Sandridge's Bankruptcy, you must be included in one or more of their Royalty Division Orders regarding one or more of the Producing Wells that they currently Operate.
Although you might not have ever received any royalty payments directly from Sandridge, you may have been receiving royalty payments from one or more of the companies that disburse such payments - the one or more companies that purchase the oil and gas produced from Well(s) that Sandridge Operates.
Sometimes Sandridge Pays, sometimes the Purchaser(s) of the Product(s) pay. None of that unusual in
"The industry", depending upon the contracts between the different companies, but it can be confusing to a "Civilian" such as yourself.
If the paperwork you received regarding Sandridge's bankruptcy does not identify the specific properties / interests / Wells you own an interest in that are subject to their bankruptcy, you need to contact Sandridge (or allow me to in your behalf) and request information identifying the same and what company(ies) is/are disbursing your royalty checks.
Either way, from the advice that I have witnessed that an extremely well qualified Oil and Gas Attorney recently allowed other clients of mine under similar circumstances, you very most definitely need to fill out and send in the "Claim" forms regarding any royalties you are owed or you might be totally screwed and only end up with a small percentage of what your are honestly owed.
If you will send me whatever paperwork you have regarding the properties or Well(s) you own interests in or have any additional information you have: Check stubs or whatever, from whatever companies you have been receiving royalty checks from over the past few months or years, I may be able to help you identify what particular Wells or Units are subject to Sandridge's Bankruptcy.
If you would prefer to do so privately, then accept my invitation to become "A Friend" on The Forum, which I will send you in a few moments and you can send me the information privately.
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
Shelly:
I'm baffled...just checked our holdings and received a letter that Midstates Just recently took over royalty payments from Unit Petroleum in Woods Cty, OK. I have yet to see a check from Midstates so don't know what is going on with that outfit. Does any other forum member know anything?
Midstates may have purchased your well(s) from Unit Petroleum. Call them and find out.
Just checked the files....actually Midstates is drilling a new well in the same section as Unit is paying on other production. Hmmm...never received any notification that they had filed for Ch 11 like Shelly received.
At least they're drilling! That's a good sign.
Everyone with interests under lease or royalties with any company undergoing Bankruptcy need to consult an Attorney familiar with Oil and Gas and Bankruptcy procedures or you may end up being an unsecured creditor and at the bottom of the list of creditors to get paid anything at all.
I haven't seen one lately, but some people add a provision in their leases making the payment of royalties a lien against the Company. They would be Secured Creditors in a situation like this.
I'll look for an example of it if you would like. At least you could add it to your future leases.
Yes, Charles, I would really appreciate seeing an example lease with extra provisions if a company goes belly-up. i.e. Ch 11 re-organization. NARO talks about this at it's meetings but I have never added this extra provision to any of my leases....YET.
Thank you for your very good advise. I will do as you suggested. Glad for your online help.
Dear Charles,
Is this what you are looking for? This is an extract from my form.
XVII. SECURITY INTEREST
17.1 In addition to the security interest under Tex.Bus.and Comm.Code § 9.343, Lessee grants to Lessor a lien on Lessee’s share of the leasehold estate covered by this Lease (Lessee’s share being the leasehold estate less the royalty estate of Lessor) in and to severed oil and gas production from this Lease to secure payment of the royalties due to Lessor. Lessor shall have all rights as a secured party under Texas law. Lessor, as Secured Party, shall have the right at any time to file this lease or memorandum of lease or a UCC-1 Financing Statement in the applicable real property records or a proper officer under the Tex.Bus.and Comm.Code to secure payment of royalties due Lessor.
17.2 Notwithstanding Lessor being a secured party as provided herein, if for any reason regardless of who has assumed responsibility to pay royalties to Lessor, if Lessor is not timely paid its share of royalty from production as provided in Section 17.1 above, this Lease shall Ipso facto terminate and be of no further force and effect. This provision shall apply whether or not Lessor approves a contract for sale or processing of Lessor’s share of oil or gas produced under the terms of this Lease. If this Lease terminates by reason of failure to pay Lessor’s royalty as provided above, Lessor may file a notice of termination of this Lease with the County Clerk in the county or counties where said Land is located. In the event of termination of this Lease in said manner, Lessee shall not remove any of Lessee’s equipment, fixtures, or personal property located on said Land, which shall become the property of Lessor by way of liquidated damages and not as a penalty.
17.3 The provisions of this Article XVII shall not apply where Lessor has elected to take Lessor’s royalty in kind or market separately Lessor’s royalty share of production under the Terms of this Lease.
17.4 This Lease shall be construed as a security agreement and in the event of bankruptcy or insolvency of Lessee, its successors or assigns, or any purchaser of production from any of said tracts, the payment of all rents, royalties or other obligations hereunder shall be deemed secured and Lessor, its successors or assigns, at their option, may elect to be treated as a priority creditor.
17.5 Notwithstanding anything herein to the contrary, Lessor’s exercise of the rights under this Article XVIII shall not be deemed as a waiver of Lessor’s right to take all actions necessary to recover unpaid royalties, late charges, interest and other damages incurred.
Best wishes,
Buddy Cotten
You plagiarized my book!
Sheri - My apologies for not having gotten back to you sooner. I was busy preparing a bunch of spreadsheets for a mediation last Thursday in Midland, TX.
Buddy's provision(s) are an excellent example.