Royalty Owner Rights to have questions answered by the Lessee

New Mexico Mineral Rights Eddy County, NM
1

As the holder of an oil and gas lease receiving overrriding royalty interest monthly income from sales, I would like to know whether or not the lessee has an obligation to answer my questions pertaining to why there was a 30% reduction in my last payment versus the prior month’s payment. There is an owner relations telephone number with a recording to leave a message and I left a detailed one. It stated that they would be back to me within 24 hours and didn’t. Does the company have a legal obligation to answer my questions as I referenced the 4 wells by name causing the drop in income? Thanks.

2

Joseph,

As you are just an ORRI owner and not a working interest owner in the wells, I don’t think they have an obligation to tell you why the check is lower than normal, but any reasonable operator should tell you. There are lots of scenarios as to why it could be lower, they may have had to shut down production and bring a work over rig on for a few days or various other reasons which are completely normal during the course of operating a well and you could see the levels return to normal the next month. Now again because you are not a working interest owner in the wells and only a ORRI owner, they might tell you they shut down for a few days, but they probably won’t go into details as to why they did.

Hope that helps and they should be able to give you an idea as to why this check was lower, but do they legally have to? I am not quite sure on that. Ask nicely and they should answer you although operators tend to be slow in responding.

Cam

3

Thank you very much…your answer is very helpful.

4

All mine were lower…Devon, Mewbourne, Cimarex, Marathon to name a few. ALL were in the 55 - 56 dollar a Barrel bracket. I thought oil had closed at 70 dollars for the month of June? I’m quite perplexed too.

5

The price that is quoted for WTI (and Brent) is a generic one. Your particular well rate will be governed by the contracts the operator has with the carrier, the sour or sweetness of the crude coming from the well, etc. Permian Basin is a bit constrained on takeaway pipelines right now which is constraining some of the prices.

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