Is it standard practice for operators to withhold royalty payments if they are below $100? If every operator did this, it could take many years to receive a check and they would definitely benefit from holding onto the revenue. This doesn’t seem right…
It is standard practice, but, typically, they will pay the balance, whatever it may be once a year.
Review your division order. Most set a minimum payment, most often $100. Many royalty owners change to $25. However, it should also contain language similar to the following - “Payment of less than $100 may be accrued before disbursement until the amount equals $100 or more, or until December 31 of each year, whichever occurs first.” This requires an annual royalty payment, even if it is a small amount. If this language is not included, consider revoking that division order and sending in an amended one.
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It also depends on what your lease says and whether or not you signed a division order allowing said distribution. My lease says the royalties are to be paid monthly, period. They sent me division orders (4 wells) trying to put in the $100/Dec. 31, clause, but also stated that the division order was not altering the lease. I called them on it and refused to sign the division orders with that clause included. They threatened not to pay me, if I did not sign. I wrote them every month asking for my royalty checks. 3 months later they started to pay monthly…
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