Royalty statement question

Royalty Statements
1

Hi,

My monthly royalty statement often has corrections to earlier royalty statements, often many years in the past. For example, in a given month's statement there may be as many as 10 or 12 monthly corrections to earlier royalty monthly amounts for a single gas well. There are two entries for an earlier month with one entry deducting whatever the royalty was in the earlier month and a second entry with a new, I guess corrected, royalty amount. The difference is usually a few dollars up or down. Does anyone know why corrections would be made to royalty payments from several years ago?

Thanks,

RW Newland

2

Have you thought about going "directly" to the horse's mouth and asking them?

Good luck,

Pat

3

Thanks.

I did ask them but did not get a clear answer.

Perhaps, I'll try again!

4

When an payor make an adjustment in their computer system, it generally kicks out the modification made for each well. Whether or not it is actually changing anything on your side or just on the gross side. Take a look at the severance taxes and see if the changes are being made on that. If so that is probably the operator getting an exemption and finally filling for it or just keying it in their system. Other changes I usually see are changes in the Btu content. This last month I had a well adjusted back to June 2011. The only changes were to the heating value and no changes to revenue on either side.

5

What really galls me about these corrections is that when they add in, they round in their favor. Then when they deduct, they round again in their favor.

6

A few of your dollars do not make a difference. A few dollars out of everyone's pockets add up to millions.

7

Thanks. Why would the BTU content change now for gas that was extracted in 2011? If the BTU content was measured in 2011, it is a constant for that well at that time.

8

Absolutely correct ... it adds up into their pockets.

I think that if I were in this position, and they continued to dismiss my questions and round off in their favor, I would file a complaint with the State Board of Public Accountancy. These people are accountable to you, regardless of who they work for or in what state.

Thank you.

Pat