I am a Royalty owner in a well in Reeves County. I was getting checks every month up until February, 2014. When the checks stopped, I started calling and emailing trying to find out what happened. I was also getting daily production reports up until March when they suddenly ceased. I tried to find out why. No one will answer the emails for return phone calls so I don't know what to do. What recourse do I have?
Glen:
You can always contact the Railroad Commission of Texas district office in Midland. They will have info on this well and these are public records. Be sure to have all the vital info available on the well.
Thank you very kindly. I will contact them.
Make sure the well has not been shut in, also. A formal demand letter also gets their attention.
I don't know if the well is shut in or not and have no way of finding out since the company is incommunicado.
Check the railroad commission's website for well records / statuses to see if it has been shut in.
I checked with the Railroad Commission and they had nothing, not even a record of completion or whatever they call it. All they knew was that a permit had been issued. Can you imagine that? The woman I talked to said she didn't have anything else and was a loss as to what to do next. I have run into more dead ends than you can imagine.
That sounds to me like compliance issues if a well was drilled and has been produced but there is only a drilling permit on file. Could you provide more detail about the specific well or a legal description? Did you tell the RRC that you have received royalties from that well in the past?
Read your lease. I know in some leases we have had there was a stipulation that royalty payments could not be withheld except for questions of title. When they were withheld twice before, I wrote their legal departments and pointed out that they owned me some interest as stipulated in the contract. I received the interest payments, however, other family members that let it slide got nothing. You have to keep after them and watch them like a hawk.
Glen,
A company that normally sends your royalty payments on time and has also been providing you with daily production reports doesn’t sound like the type of outfit to deliberately hide the ball from its lessors. If it’s a small company it may be that they’re trying to handle something unusual going on with the company itself like a key staffing change or a sale.
However, thats not to say that the sudden radio silence should be excused for such reasons, or that it’s nothing to worry about. Send a letter to them by certified mail (so you’ll get a signature card letting you know that someone at least received it) informing them of the facts and asking that your payments and reports resume without further delay. This usually lights a fire at oil companies in a way that a phone call or email doesn’t, and anyway you won’t get very far with seeking legal recourse without being able to prove you first sent this letter before going to court.
Thank you, Andrew. Advice well taken.
Glen-
You might want to check out the Video on the Home page of this site, that shows you how to navigate the RRC website.
Wade,
Great information!! I jumped to it and found it at the bottom center of the page.
Thanks!!!!!!!
Bob
This brings up an interesting question in general.
After one starts receiving royalty payments, how does one ascertain the amount and regularity of the production, is there a way to do so or is it just a roll of the dice?
Susie:
You could always research records at the RRC office as they maintain all records on wells in Texas. If outside Texas, most likely records are kept at the District or Main offices of the agency which oversees Oil and Gas production.
If you can get a monthly production report, multiply the number of barrels by whatever the market is paying per barrel, and multiply that sum by whatever your royalty percentage is, that will give you a ball park figure as to what to expect. You will probably have some gas in there so expect the total figure to be a little more. I'm told you need to pay close attention to production reports, the price of oil on the market, and get names of people at the company that you can communicate with when you have questions. I have no idea how they decide to send checks. If you can find out I would like to know. :o)
Good luck.
Don't forget to figure in other charges (transportation, etc.)
Thanks for all the advice friends.
Susie-
Dice are more predictable.
You can compare your check stubs against the records filed with the RRC and the Comptroller's Office, but as far as predicting regularity, it is a very dicey proposition, pun intended. There are many threads on this site about decline curves, but when you factor in price fluctuations, well workovers, transportation problems, and just bad or good luck, it is hard to do any financial planning on future royalty payments unless you have a large number of wells and can spread your risk. Assuming that is not the case, the best advice I have heard is: 1) assume your bonus is the last you will ever get; and 2) assume your last royalty check is the largest one you will ever get. If you are wrong, be pleasantly surprised.
Hi Wade. That is extremely sensible advice so thanks for sharing. All persons on all boards need to look at the royalities with that kind of sensibility.