Sorry folks, I have to do this in large print. My question is, we receive mineral rights checks from a certain company. This month's check was the lowest ever received in over 14 years. When I called the company and questioned them about it, yes...they noticed that it was smaller than previous issued. They are supposedly investigating why the shortage, but so far have ignored e-mails and phone calls placed. What more can I do? Am at my wit's end! Any suggestions out there???
Sandra, 14 years of decline is a fairly long time, but there is really not enough to comment on. Have your post production costs gone up recently by any chance?
There really hasn't been too much of a decline. Checks have ranged from the low hundreds to thousands...very steady. I keep up with the production and cost of oil per barrel. Somebody screwed up big-time, but they are reluctant to 'fess up as to what happened. I have it on good authority that there is a lot of drilling going on, so things should be copacetic.
r w kennedy said:
Sandra, 14 years of decline is a fairly long time, but there is really not enough to comment on. Have your post production costs gone up recently by any chance?
Sandra, without alot more to go on, your minerals may have already been drilled to their full known extent a couple years ago and your checks could shrink from here on out, or conversely, you could have just had a couple of wells drilled and the old wells shut down while they were fracking, it happens all the time. There must be dozens of other reasons.
Sandra, you say you keep up with production and the price of oil, I was asking about post production costs such as the gathering, separating, dehydrating compressing and marketing charges for gas and transportation charges for oil. If a significant part of your check is from gas, you wouldn't be the first person to have their check greatly reduced because the post production costs had changed. Or they could have just made a big booboo and I don't think anyone but you will be able to tell because you have the paperwork.
Who know what happened...in the meantime, it is driving me crazy of the not knowing. Will keep you posted
Thanks for your input. It was a huge help.
I realize this was posted in July but felt a need to respond. Production for 14 years has probably resulted in a decline and a possible workover. Production can cease or trickle during these times. What we do when the companies treat us like they are treating you is to consistently call them until they get tired of us calling. It’s slow and painful but we always get our questions answered and many times money is recovered.
It can't be commodity prices since oil is doing pretty well. It would be different if this were a gas well.
Sandra, I agree with Wade that you need to become a "squeaky wheel." I'm a division order analyst, and I'm here to tell you that the owner who calls me every day, on the third day I'm going to drop whatever I'm doing and resolve that owner's issue so they will leave me alone. Just understand that if you get that extreme, there are analysts out there who are not like me, and they might start treating you unfairly in other ways. One call every week until action is taken is certainly reasonable. This is now October--has this issue still not been resolved since July??
Hello: Marsha, I am still having problems, but also being a "squeaky wheel". I will not give up until I get a truthful answer from them. November was a non-issuance of royalties. December was received with the note that there "is a interest miscalculation". This was "recently discovered" and that they only went back as far as 2012 up until Dec 2013. How can that be, if we have been receiving royalties for 14 years? I realize that mistakes happen, but a 14 year mistake?
Marsha Breazeale said:
Sandra, I agree with Wade that you need to become a "squeaky wheel." I'm a division order analyst, and I'm here to tell you that the owner who calls me every day, on the third day I'm going to drop whatever I'm doing and resolve that owner's issue so they will leave me alone. Just understand that if you get that extreme, there are analysts out there who are not like me, and they might start treating you unfairly in other ways. One call every week until action is taken is certainly reasonable. This is now October--has this issue still not been resolved since July??
Sandra, am I reading your question correctly, that the payer (oil company) said they have corrected the decimal calculation for the production period from 2012 through Dec 2013? So it sounds like they are not going back 12 years (which they legally can't do in Texas--I don't know where your land is located), they are going back for a maximum of 2 years of production. But I have some serious concerns about what they are doing. So I have a few questions for you to specifically ask them, to help you more with this.
1. They claim they have paid you at a higher decimal of interest than what they have "discovered" they should have been paying you. If they are legitimate about that claim, they should have issued a Revised Division Order to you to sign for the lesser interest, regardless of what state you are in. If they did not, what excuse can they give why not?
2. They claim you should be being paid at a lower decimal of interest--that the higher decimal you were receiving was a "miscalculation". Fine--write them by CERTIFIED LETTER and them that by their own admission they claim to know now just how your "new" decimal is calculated--so they are to respond IN WRITING WITHIN 30 DAYS and give you the complete calculation formula showing how your new payment decimal was calculated. This is called "fractional text" by us division order analysts. For example, a "new" decimal of 0.00213788 RI it might be calculated using 1/2 x 27/148 x 3/16 x 40/320 = 0.00213788, where "1/2" is the amount inherited from a parent of the "27/148" mineral rights owned by that parent, times "3/16" which is the royalty rate in the lease, times "40/320" which is 40 acres of the leased land inside a 320-acre pooled unit. By the way, demand in the certified letter that they send you a Revised Division Order, so they will have to address that request also.
3. A certified letter sent to an oil company, attention: division order department will ALWAYS get immediate attention because the laws in almost every state require that formal request for assistance be made that way before a lawsuit can be filed. Such a letter puts the oil company on notice that you might be getting ready to seek legal action, something they will jump through ANY hoop to avoid.
Good luck--and keep me informed of your progress? If you would like more detailed help, it would help me to know the name of the payer oil company. You can send the name to me at marshab at oilpatchpress dot com, and I might be able to give you a great deal more information helpful to your plight.
Hi, Marsha:
I am reluctant to give you the name of the oil company, just in case you work for them. In answer to your question, NO, there was no form of written excuse given, only verbal. I will, however be sending them a certified letter addressing the issues at hand. I had been calling, sending e-mails and even written correspondence. Very seldom did I even get any kind of acknowledgement. They are treating me like I am some kind of nut or worse. I will not go away until I get answers!
I think you should get a lawyer involved. If you choose to use one message me and I’ll give you the name a number of ours.
Only if you know of any oil lawyers that can practice in Oregon and Texas.
I work as a division order analyst for Contango Oil and Gas Company here in Houston and strive to handle inquiries and complaints from royalty owners quickly and professionally. The reason I asked for the name of the company is because there are a couple of companies that are struggling with very young, inexperienced staff and other internal issues that could be adding to your problems without you knowing it. The two larger ones that are experiencing a lot of trouble in this area are Chesapeake and Devon.
Chesapeake is dealing with internal struggles, fending off attempts by Carl Icahn (a "corporate raider") to overhaul the company's current operational model. Chesapeake is also struggling to keep experienced analysts on their staff: they seem to train with CHK for a while then get poached away to work for any number of smaller companies in OKC.
Then there's Devon that closed its Houston office in December, 2012, where 90% of their most experienced land and land administration professionals were working. Of the 400 employees in the Houston office, only 100 of them accepted the move to Oklahoma City. This caused Devon some significant internal strain, trying to train replacements with no prior experience to take over jobs requiring 10+ years of experience to be able to do them well. There are also many small independent operators who are experiencing the same or different problems that could affect the correctness and timeliness of payments to royalty owners.
A certified letter takes the matter out of the hands of an inexperienced trainee and should place it in the supervisor's hands or in the hands of the legal department, someone who should know how to handle it quickly and correctly.
Ms. Breazeale,
I have been reading the back and forth comments from you and the person who is having issues with, I believe his mother Royalty Check. So, since you work for an oil company as a Division Order Analyst, (not the company I receive my checks from), I figured maybe you could shed some light on my situation, or at the very least steer me in the right direction. I know these posts are from Jan. 2014, but I'm hoping you are still in a position to give a little advice.
I and my (2) siblings began receiving royalty checks from interest inherited from our mother. The first check being a large one containing, back royalties for a full year of 2012 production. Since receiving that first check, all following monthly payments have been between $3k to $2k with the exception of on that was $5k, for the 2013 production. Now, however, the 2014 production royalty checks we have had much more fluctuation in terms of amounts paid in royalties. I have tried to do some research on my own, and have been able to verify production volumes through the RRC website.
One area of concern in verifying those numbers, is when I look at the provided data on our check stubs, the numbers printed there are approximately 2x's lower then reported to RRC. I'm new to this, therefore, I don't know how they calculate the volumes to be paid to the royalty holders? Our royalties seem to be more on the Gas side, but do also contain Oil payments as well. So, the 2013 payments began going down anywhere from $500 mo. to as much as $1000 mo., then we would get one that would be up again.
The 2014 checks have ranged from $1500 - $2000, that is until we received the last check dated 07/31/2014, that was only $513. What a SHOCKER!! So going back to the RRC site and comparing the numbers reported to the numbers on the checks, well, again, they do not match up. Example: numbers from one of the two (2) wells reads Prod. Date: 05/2014; Product: Gas; Int. Type: NPRI; Price: 4.90; Deck Dcml/Dist Dcml: 0.01015751; Gross Volume/Owner Volume: 1754.00/17.82; Gross Value/Owner Value: $8596.17/87.32; Gross Taxes/Owner Taxes: 4.00/0.04; Gross Deducts/Owner Deducts:2323.14/0.00; Gross Net/ Owner Net: 6269.03/87.28, next line reads: 05/2014, PPROD, NPRI, 4.90, 0.01015751 , 1436.00/14.59, 7992.97/81.19, 000/0.00, 1229.72/0.00, 6763.25/81.19. Last line for this well reads: 06/2014, OIL, NPRI, 101.15, 0.01015751, 86.40/0.88, 8739.20/88.77, 402.00/4.08, 0.00/0.00, 8337.20/84.69. Then a line of totals for the page which include both wells. But since we are only using one well for this example, when I looked up the RRC numbers they were 6405 for the Gas, & No RPT. for the 06/2014 Oil.
While their numbers may be correct on the checks, I was wondering why they are so low and why they didn't include Gas for 06/2014 or any amounts for 04/2014, since all past checks seem to include two or previous months, also given the Press Releases from this particular oil & gas company claiming that 1st qtr 2014 has been their best since onset, and that they attribute that to the S. Texas plays.
So, I am just really confused, lost, and was hoping to get some clarification on what could be going one or if I should be contacting the company for some explanations.
Any advise or information you might be able to provide to help me better understand how all this works would be greatly appreciated.
Sheryl,
I looks like you're wanting to know (1) why your checks are fluctuating so widely, and (2) why you weren't paid Gas for 6/2014 and 4/2014 production months. The check detail information you gave was for May, 2014 gas production and June, 2014 oil. The check was dated 7/31/2014. It is common for gas to be paid two months behind the month of production and oil paid just one month behind, although not all companies do it that way. Mine, for instance, pays both gas and oil two months behind production as do many others I know. The second line that starts "PPROD" is detailing plant products, which are the liquids extracted and gathered from wet gas. The first high number is the gross amount of revenues received from the purchaser for that type of PP, then the smaller number is that bigger number multiplied by your share of it, which appears to be 0.01015751. For instance, "1436.00/14.59" would be $1,436.00 x 0.01015751 = $14.586 which rounds up to $14.59.
It's always a good idea to contact the remitter whenever you have a question specific to the information in a check. The remitter can explain how to interpret the detail, and generally answer your questions about how your production share was valued and what deductions were made from it. However, I do see that out of Gross Deducts of $2,323.14, you were deducted $0.00, which means your non-participating royalty interest is covered by a lease containing a cost-free provision, and you were wise to ratify the lease instead of ratifying the pooled unit. If you had ratified the pooled unit instead, you would be paying your 0.01015751 of all post-production costs.
As for the variances in the check amounts from month to month, and missing months of certain production, here is what you need to know. For various legitimate reasons (environmental safety, reservoir management, and others) a well producing gas from time to time needs to be shut in (shut off temporarily) and the shut-in time could last just a day or two, or it can go on for a couple of weeks or more. Don't confuse this with the "shut-in" talked about in the lease. The kind I'm talking about only occurs when the well technically is not capable of (or shouldn't be forced to) produce for some short period of time. This reduces the total amount of production taken by the purchaser, and causes the revenue check to be lower for that month. As for oil, for a well that produces primarily gas, any oil will flow to a tank and a truck will come out periodically and pick up the oil. The oil is considered sold only when the truck picks it up, and not when it's just sitting there after coming out of the well. This is probably why you saw "No RPT" for the 6/2014 oil. A truck didn't pick up any oil from your well during the month of June. But there was oil picked up in July when there was enough in the tank to justify the trip out there to pick it up.
Does this help answer some of your questions? The others that you still have will be specific to your wells, and I strongly recommend that you call the main number for the well operator or the company who issued the check, and ask specifically to speak to their division order analyst. If you get diverted to an Owner Relations number instead and you're forced to leave a message hoping someone will call back, feel free to email me at marshab at oilpatchpress dot com and tell me the name of the company and I'll get a division order analyst name and direct number to their desk if I can.
Ms. Breazeal,
Thank you for the response, I think that you probably answered the immediate question with the "Shut-in" explantion. I will, however, contact the company to verify that iis the case and get any additional information they are willing to provide. Should I run into an issue as you described, I will be in contact with you.
Your response and willingness to help in the future if needed is greatly appreciated.
Marsha Breazeale said:
Sheryl,
I looks like you're wanting to know (1) why your checks are fluctuating so widely, and (2) why you weren't paid Gas for 6/2014 and 4/2014 production months. The check detail information you gave was for May, 2014 gas production and June, 2014 oil. The check was dated 7/31/2014. It is common for gas to be paid two months behind the month of production and oil paid just one month behind, although not all companies do it that way. Mine, for instance, pays both gas and oil two months behind production as do many others I know. The second line that starts "PPROD" is detailing plant products, which are the liquids extracted and gathered from wet gas. The first high number is the gross amount of revenues received from the purchaser for that type of PP, then the smaller number is that bigger number multiplied by your share of it, which appears to be 0.01015751. For instance, "1436.00/14.59" would be $1,436.00 x 0.01015751 = $14.586 which rounds up to $14.59.
It's always a good idea to contact the remitter whenever you have a question specific to the information in a check. The remitter can explain how to interpret the detail, and generally answer your questions about how your production share was valued and what deductions were made from it. However, I do see that out of Gross Deducts of $2,323.14, you were deducted $0.00, which means your non-participating royalty interest is covered by a lease containing a cost-free provision, and you were wise to ratify the lease instead of ratifying the pooled unit. If you had ratified the pooled unit instead, you would be paying your 0.01015751 of all post-production costs.
As for the variances in the check amounts from month to month, and missing months of certain production, here is what you need to know. For various legitimate reasons (environmental safety, reservoir management, and others) a well producing gas from time to time needs to be shut in (shut off temporarily) and the shut-in time could last just a day or two, or it can go on for a couple of weeks or more. Don't confuse this with the "shut-in" talked about in the lease. The kind I'm talking about only occurs when the well technically is not capable of (or shouldn't be forced to) produce for some short period of time. This reduces the total amount of production taken by the purchaser, and causes the revenue check to be lower for that month. As for oil, for a well that produces primarily gas, any oil will flow to a tank and a truck will come out periodically and pick up the oil. The oil is considered sold only when the truck picks it up, and not when it's just sitting there after coming out of the well. This is probably why you saw "No RPT" for the 6/2014 oil. A truck didn't pick up any oil from your well during the month of June. But there was oil picked up in July when there was enough in the tank to justify the trip out there to pick it up.
Does this help answer some of your questions? The others that you still have will be specific to your wells, and I strongly recommend that you call the main number for the well operator or the company who issued the check, and ask specifically to speak to their division order analyst. If you get diverted to an Owner Relations number instead and you're forced to leave a message hoping someone will call back, feel free to email me at marshab at oilpatchpress dot com and tell me the name of the company and I'll get a division order analyst name and direct number to their desk if I can.