R W, Thank you for your information. I've never seen it put exactly as you are saying so I will do some research and work on my lease some more. Do you have an opinion or knowledge on my original question? If an oil company does not owe any severance tax to the state for any given month, can they legally collect the royalty owners share and keep the money, i.e. line their own pockets with that tax money?
You are also 100% correct in your assessment of a lot of the mineral owners "pie in the sky" or like one of our family members, "pennies from heaven" I reminded them that minerals are real property, our Ancestry's worked to save the minerals for the family and if they don't work to keep them then they could lose their "pennies from heaven". We are fortune in one fact most of our family members and other mineral owners in our acres try to stick together on our leasing.
I'm thankful that we have this forum to come to and learn from. Thanks again for your input and I wish you the best of luck in your endeavors.
Mr. Eardley. I was just reading up on the issue for North Dakota. In ND, when the unit production falls to a certain point, it becomes elegible for stripper well/property status, this is only determined after the fact based on one years production, so of course severance tax has been collected, which raises the point of whether that tax is returned. Keep in mind that production and severance taxes on oil are much higher in ND than I hear they are in Texas or Oklahoma. I do not know if it is the one year cumulative production used in Tx/Ok, but I imagine it would be similar. It would also be so easy for the operator to just continue to collect taxes that they do not pass on to the state because how would the average mineral owner know? Would the operator do it? I think it likely that the operator if caught red handed, would merely have to return the money, with no real penalty involved. I would be more surprised if the operator did not continue to take severance taxes that they did not pass on to the state, just my opinion.
I built my spreadsheet and it ended up being 2 pages wide in landscape format!!! Proved several things over the last 15 years of well production: #1 the oil company has stolen approx $100,000 from the family in deductions for lease use fuel (we have a cost free lease). #2 there are numerous overcharges on severance taxes however, this part is very hard to track.
I have learned several things too... Because we are "indirect" payers of severance tax, Texas Comptrollers Office could care less. Fiduciary responsibility does not apply either because the Comptroller cannot come to you directly for tax payment. The Texas Legislature has knowing enabled oil companies to escape fair & honest dealing by maintaining a 4 year statute for discovery. Furthermore the Texas Supreme Court has upheld the laws/rules even to the point of issuing an opinion of "because all information is available for public access on the internet the mineral/royalty owner had reasonable access!!!" There was also a class action suit that settled out of court involving many, many Texas mineral/royalty owners verses 20+ oil companies.
Google searches are awesome for research. I am not an attorney nor a landman so don't take my word as fact. My only knowledge is a basic understanding of contacts, accounting and law. With that said, as far as i can tell, the basis of a lawsuit must be fraud and intentional financial harm/theft. Fraud and theft do not have the same statute of limitations (from what I have read & been told).
Mr Kennedy & Mr Cotton are certainly have much more valuable knowledge and experience with the law. Hopefully something i've said helps. Maybe if we all start pushing back on the heavy handed dealing by oil companies someone in Austin will start listening. In my research it has become obvious that the mineral/royalty owner's only protector is himself/herself. Even the greatest lease in the world seams to be ignored by the BIG oil company.