I settled a dispute with an operator on erroneous decimal interest on existing production. I seem to remember that operators in Oklahoma are required by law to pay interest on unpaid royalty. What is the interest rate and how is it calculated? This production goes back a decade.
Search for Oklahoma Production Revenue Standards Act.
Thanks Todd!
The statute can be found at:
There has been an amendment to the law, I think in 2018. No longer at standard 6%. Uses interest rate of from some Wall Street source so will vary from 6% accordingly.
I had similar situation with another operator about three years ago. Received 12%, per annum. The interest was significantly more than the unpaid royalty as it was two aging gas wells past their prime.
It is almost getting another 1/8th interest in the well.
Keep your eyes on the recent Sunoco lawsuit. They were levied a huge fine for not paying interest on purpose. They would wait until mineral owners demanded it.
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what is the rate in texas?
Texas is much much less. Tied to a different federal interest rate. It is in their statutory code. I haven’t looked it up in a long, long time.
John, I had the same thing happen. I had a piddly well that a company totally forgot to pay on for seven years. I was working on a relative’s estate and found the missing well with no payments. We made more in the interest payments (lovely compound interest on top of interest!) on the well than we did in royalties!
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“Compound Interest”- The 2 most powerful words in the English language. Operators can keep my money if they will pay me 12%.
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In the ‘piddly well’ example, is “forgot to pay” the same as “payments held in suspense”?
In our case, it was not. They were already paying us for another well in the section. They just “forgot…”. Probably had to do with a change of operator and the confusion that went with that. They had a deck of old wells from the previous operator and forgot to add the new wells or some such reason. Cost them a lot of money. “Held in suspense” usually has a title reason.
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Thanks M_Barnes. Often post office problems seem to be enough to merit “in suspense”. As you often note, it is helpful to keep paying attention, even when you think nothing has changed.
As some on here are aware Casillas went about a year and a half without paying our royalty and then after the first payment they have made regular payments but have never paid us the interest. I have sent them a couple of registered letters and a copy of the Okla. law about the interest. I’m wondering… will the interest be owed on just the year and a half and will it be compounded? That’s if we ever get paid. I believe it’s been about 2 years now since the first production but not sure. Should we take them to small claims court or just trust that they will be pay someday? What would you do?
I would send them another letter. They have been going through many changes & just merged again.
Linda, I believe you are owed 1% per month ( 12% per annum ) on the net amount of your late payment and can be compounded annually. I suggest you read the Cline vs Sunoco final judgment of August,27 2020 in which Judge Gibney ruled that interest payments are to be paid automatically with late payments. In my opinion, when this does not happen, you should be owed 1% per month additionally on the interest.
We are having the same problem with Red Rocks.
Possibly great class action lawsuit potential!
This operator’s legal department states that statutory interest claims have a five year statute of limitations in Oklahoma.
Ask for the Statute section and subsection…
“The OK Production Revenue Standard Act (PRSA) contains a five year limitations period from the date the action accrued. 52 Okl. St. Ann. § 570.14(D). The OK Energy Litigation Reform Act makes it clear that the PRSA is the exclusive remedy to a person entitled to proceeds from production for failure of a holder to pay the proceeds within the time periods required for payment. 52 Okl. St. Ann. § 903. “
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