I am assisting my father who is a mineral rights owner in North Dakota. The oil company made a mistake and delayed payments more than 150 days after the oil was marketed and have agreed to pay interest. The statute indicates that he should not have had to request the interest, but in fact did before they released the initial royalty payment. The interest was not paid until 3 months after the late royalty payment was made.
Does anyone know if there is any guidance out there on how the interest should be paid? Is it from the 151st day after the oil was marketed to the day the royalty payment is made or is it to from the 151st day after the oil was marketed to the day they pay the interest or alternatively does interest go all the way back to the date marketed? Ideally they royalty payment and interest would be paid at the same time but that did not occur here. The statute states in part "the operator thereafter shall pay interest on the unpaid royalties . . . at the rate of eighteen percent per annum until paid."
I read that and it appears they should interest at a minimum until they pay the interest, not the royalty itself in case such as this when they did not pay the interest at the same time as the royalty. Just don't know if I am interpreting the statute incorrectly.
Interesting question. I am sure they will not pay interest on the interest. You would probably have a fight getting them to pay interest on partial months. Whatever amount of time the operator is late, the last 150 days is always free, because the state says they only have to pay interest on payments more than 150 days past due.
I think it would be more fair that interest should be paid on all of it if the operator took more than one year to pay. I mean that the operator must have someones mineral interest figured, why would they, or should they, be allowed to hold everyones money until they have all figured out? Not to mention that if your title is no good, the operators/lessee's title to the oil derived from your lease shouldn't be any good. If the operator says your title is not good enough to pay royalty on, all of the proceeds from sales of production attributed to your acres should go into escrow until title is verified, otherwise the operator and lessee could be in posession of money that isn't theirs and they put people in prison for that sort of thing in other industries.
Interpreting the statutes can be interesting. I am still looking for the statute that says the operator /lessee must pay royalty to the lessor at all. The law say interest accrues if royalty is not paid 150 days after first sales, if you have marketable title, that is not the same thing as saying the operator /lessee must pay. The operator can simply refuse to pay royalty or interest until you sue them. If anyone has information to the contrary, I'd like to see it.