Hi everyone. My company has small working interests in various wells in Texas. For a variety of reasons, we suspect the current operator is mishandling the finances of the operation, charging the nonoperators with amounts he makes up, siphoning funds to his own related companies, etc. Any idea how we would go about getting more information to prove our suspicions? The operator is hostile to any questions. Can I find out if other working interest holders are having similar concerns? (How do I determine who the other working interest holders are?)
You should have a JOA (Joint Operating Agreement) which sets out the rights and liabilities of the operator and non-op WI. That agreement should give you the right to review and audit all the original records, including seeing the underlying invoices from third parties; the contracts between the operator and purchaser(s) for sale of the oil and gas; transportation and gathering agreements; processing plant statements; property tax statements; etc. This is a common practice by many non-op WI when there are questions. The JOA usually gives the non-op WI greater ability to audit than an oil and gas lease. You should consider consulting an attorney who is experienced with WI to review the JOA and give you specific advice. One way to find other non-WI would be to trace the ownership history of the leases in the wells or units through the deed records.