Is anyone else, other than our family members, having trouble with Permian making deductions (some as high as 30 - 50% of our royalty) from their checks that are contradictory to the terms of the lease? In 5 years with Centennial, we did not have this problem, and no one with Permian will communicate with us.
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Hi Helen,
We have wells in Section 38 originally drilled by Centennial and sold to Permian Resources about 6 months ago. So far we have not had any problems with Permian (keeping our fingers crossed.) Have you tried a certified letter, RRR? If you’ve tried everything I’d suggest contacting an Oil and Gas attorney. There are several who advertise on this site under the Directories menu. Good luck.
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I’ve been after them for several months now with the same issue. Yesterday they sent an email response. Below is their answer.
“ Permian Resources sells the oil, gas, and related products it produces at the wellhead, to an unaffiliated third-party purchaser. When that purchaser buys the gas and related products, it pays Permian Resources a negotiated price which sometimes takes into account the cost of certain services the purchaser will require after it acquires the oil and gas. In the interest of transparency to its royalty owners, Permian Resources’ Revenue Statements reflect these adjustments to purchase price. Over the past months, these items have been described on your Revenue Statements as “Owner Deductions” as a naming convention used by the new accounting software and processes, but they are not in actuality deductions from the amounts on which your royalty is calculated. Our team has been able to ensure going forward these items are not described under “Owner Deductions” and your check this month will reflect the update accordingly.”
It seems to say that the “deductions” were not really deductions and are now going to be subtracted some other way. A deduction by any other name still stinks the same.
There is specific language in my lease stating that the only deductions shall be the standard tax deductions and nothing else. We’ll see what happens next.
Most likely Permian will deduct the costs directly out of the Gross Sales instead listing Gross Sales and separate Costs in the check detail. So the effective net revenues and net royalties will be the same. It will just appear that there are no costs because the Gross Sales are understated. The bad thing is that because your depletion is calculated off of Gross Royalties, you will lose part of your depletion deduction. This is what Colgate was doing on its checks and most royalty owners mistakenly thought they were not being charged costs.
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We got the identical response from Permian attorney. However, our lease has an “add back” clause, as well as a clause for specific items for which we cannot be charged, so we have contacted our attorney who stated that Permian has breached our lease. It’s in his hands now for recourse.
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We were not mistaken. Unwarranted costs were listed on our revenue statement. We never had this problem with Centennial. This has been turned over to our attorney.
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Helen I have interests in Reeves County too that was formerly operated by Colgate Operating now merged into Permian Resources. After I saw your post I reviewed all of my Colgate royalty statements going clear back to 2019. There were no “Owner Deductions” with Colgate as the operator. I reviewed my Permian Resources statements that started in January 2023 and “Owner Deductions” appeared on my royalty statements through April 2023 and then on my last statement for May 2023 there were no “Owner Deductions.” I will contact Permian Resources for an explanation. Thanks for your post.
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Colgate always netted costs out of the gross revenues reported on your check detail. The costs were deducted, but not openly as a separate line on the check detail. If you compare the combined Gross Value for gas and NGL on your check detail with the total Gross Gas Sales reported to the Texas Comptroller on the CONG website, you will see that the Gross Value on the check detail is lower than the CONG Gross Sales. The difference matches the Marketing Cost listed on the CONG site. The only difference with the new Permian Resources checks is that the new check set out 100% of the sales and then deduct the costs as a separate line. CONG - Cookies are required for this application.
I’m having the same issue. Under Colgate, I was charged a very conservation tax and a production tax - both very minimal. There were no deductions.
Under Permian Resources, I’m being charged a compression tax which is about 45% of my gas royalty revenue!
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Permian’s response is not acceptable as it is contrary to the terms of our lease. We will be pursuing legal recourse.
Thanks Helen. Based on the posts listed here for this topic, it appears that several people are having similar issues with Permian Resources. Please be sure to post the outcome of any legal action you take to get this resolved.
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The net result is NOT the same. Income each month has declined 30-50%. Our lease specifically states that we are not to be charged for anything except state production tax.
As you have noted, it is a matter for your attorney regarding deduction of any costs under the specific provisions of your lease. I was only noting that some companies net the costs out of the gross revenues and so it is not readily apparent that costs have been charged. Centennial did not do this as far I know. So you have a change under Permian Resources.
TennisDaze, we have an “add back” clause in our lease which Permian Resources has not honored. Our attorney who prepared the lease is in communication with Permian regarding this. Others who are having these unauthorized deductions made might want to check with the attorney who prepared the lease, assuming that the lease was not prepared by an oil company.
Any Permian Royalty owners having an issue with monthly income? The past two months ours has gone from thousands to hundreds. Last month the story was they have changed who they’re selling to and the changeover “was a mess”. Assured us it would be made up in this months check, which was even less. Any information on what’s going on? Owner Relations is impossible to reach.
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They just skipped sending checks the last 2 months. No response. So yeah they are on the naughty list right now.
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We got the same reply from Permian that you did, but our attorney, who prepared our leased, was able to get Permian to reverse the deductions which were added back to my June check. However, other family members have not received their reimbursements yet. Our lease has an “add back” clause, so check with your attorney to see if yours might, also. Permian would not make corrections until contacted by our attorney.
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Please see my response to Cindy below.
Please see my response to Cindy below to perhaps get a favorable response from Permian.
Got an email from Permian’s barrister confirming my claim and indicating that the problem would be corrected on the June check. Got the statement which did show some “deductions” were reversed. However, others were not. Stay tuned.
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