On all of these Chapter 11s where you are being paid and the company is promising to continue to pay, you should still ask yourself the following questions (just a guideline - many chapter 11s also allow certain royalty owner claims to survive the bankruptcy and not be discharged, but you have to delve into the details of the bankruptcy to figure this out):
- Was the company current on my royalty payments?
- Have I checked to make sure no additional wells were drilled they had not started paying me on yet?
- Was the company in breach of any provisions in my lease?
- Had the company taken any improper deductions from my royalty payments?
- Were there any payments in suspense, or wells I was not being paid on, due to title issues?
- Were there any other overdue payments under the lease, e.g. extension options?
- Did the company owe me a release, partial release or depth severance release on an expired lease?
- Did the lease involve old wells not producing in paying quantities where I may have been able to get the lease terminated?
- If I also owned the surface, was I owed any surface damage payments?
- Were there any easement payments that I was owed, where they had already built the improvement and we were working out the easement agreement?
- Was I owed any seismic permit payments?
- Did I have any claims that the operator should have drilled offset wells?
- Had a horizontal well been drilled where they were using a production allocation formula I did not think was correct?
- Was I owed any lease bonuses that had not been paid or were going to come due during the bankruptcy?
- Will I be owed any payments from a regular source of income, i.e. water sales?
- Is there anything I am wanting to do that the lease may prohibit or restrict without their consent, i.e. selling minerals where the lease gives them a right of first refusal?
- Is there any unmitigated work they were supposed to do, i.e. plugging wells, cleaning up pits, etc.?
- Is the company current on my SWD payments, and are those covered in the interim orders that are being entered?
- Was this bankruptcy filed in Delaware, where they may try to argue I am not a secured creditor?
Remember, a No answer to all of these does not mean the court notices can go in File 13. Approach a bankruptcy as a potential threat to any claim you have, or know you are going to have soon, against an operator. It can also be an easier, cheaper, and opportune time to get them resolved, as the whole focus of a bankruptcy court, as compared to a state court lawsuit, is to get claims resolved and to try to get the company back on its feet or sold.