I am a conservator for my son who owns mineral rights on sections 22-151-99, 26-151-99 & 27-151-99. He has inherited these from his father and we are going thru the process with XTO Energy to get the approval letter from him showing him as owner. Its been going on for over a year. Has anyone else had issues with XTO? I read their website and they seem to be a professional base company. But the process is so slow. The other Operators that I have worked with have been real easy and he has been getting royalty checks from them. They even sent out right away the back pay that was sitting in his father account. Unfortunatly the good chunk of his royalties are comming from XTO. I know their is an 18% intrest if they dont pay 150 days after production. The production has been going on for close to 2 years. So I don't know if they will have to pay more. Any ideas on that?
I presume your last statement comes through the Revenue standards act. I would think that the "punitive" interest comes if you have marketable title. If you have provided the appropriate information, it should be honored and in the process of pay status. Additionally, you might send the same information with a letter-in-lieu of Division Order, in the event your interest is suspended due to no executed Division Order. Additionally, emailing or sending certified can help you date stamp the request for future recourse. My overall recommendation is sending it to a Regional Landman to run through the chain. Every operator/purchaser is doing their best to keep up with the frenetic pace but this should be resolved timely with the appropriate instruments provided.
Jenny, I believe that part of your problem is the change of ownership from Denbury Onshore to XTO. From what I have seen, operators just move forward if they can and clean up the mess later. I count 7 wellbores in the 15-22 well spacing, meaning you have 7 wells there, some drilled in section 15, some drilled in section 22 and some offsite drilled from section 10 through sections 15 and 22.
It's impractical to force the operator to pay, but if you have good title, as I hope you do since other operators are paying you, you can keep reminding XTO that interest is building.
I would say that it is A) a pity they do not have the ownership figured out since they have been producing in that spacing since January of 2012 or alternately B) disgusting. If you have not received payment from that spacing they are more than a year past the 150 days on one well that had production of 112,898 barrels as of May. More than 97k barrels past due.
Unfortunately, the interest is not as much as it sounds like, calculated as 1.5% for one month past due 3% for two months past due and so on. Still worth having and if XTO wants to wait much longer the greater it will be. The first months sale of 16,539 x $80 (conservative) = $1,323,120. XTO will not be happy about paying interest to anyone with good marketable title. The second month was probably over $1,000,000 also. Make sure you get the interest.
Jenny, by law you are not required to return a division order in the state of North Dakota to be paid, the operator can not use that as an excuse.
I have been on a weekly basis in contact with XTO with status. They did approve my sons title on 7/18/2013 and said a approval letter will be sent out. I followed up with them on 7/26/2013 to let them know that I have not received a letter and their response was a letter goes out 2 to 3 weeks after the approval. This whole process has taken so long since his fathers probate was finished last November. Last November I contacted Denbury and they told me about the ownership change and they said that XTO is in process of organizing how they are going to handle the title issues and ownerships on new transfers. I finally got a contact at XTO to send them all the paperwork I had for ownership transfer from my lawyer from the county and so on. I even had to go to court to become conservator because of my son is a minor. That process of sending them to start the transfer was March 4th. They told me it would take up to 90 days for the transfer. They finally approved the transfer on July 18th. Way over the 90 days. I am just frustrated because I am afraid they are not going to pay my son what is owed to him because due to his dads timely death no revenue was ever distributed. So their should be a good chunck of money sitting in there back from when it was runned by Denbury. I have asked XTO how much is in the account and they said they cant disclose it.
I have been reading up on the ND oil and gas website. Good info. But I have a question. On one of the wells it says in "producing well completed" status. What does that mean?
Thanks for all your help. And listen to me whine about this.. LOL
Jenny, first the bad news, you probably don't have a great deal of interest coming because you needed the probate completed to have marketable title.
There should be a good chunk of royalty money waiting and as there are 7 wells producing from the 15-22 spacing alone there should be some monthly income depending on your royalty and net acres leased in that one spacing, when XTO decides to pay you. They did not drill 7 wells in that spacing because they didn't like it.
XTO has drilled 6 of the 7 wells this year and your spacing is not the only one that this is happening, I'm sure that money is really tight for XTO at the moment and they are going to take advantage of the 150 day float that is allowed before they must by law pay interest if you have marketable title, and they are going to pay interest too where they have to.
Jenny, they will pay but they are probably robbing peter to pay paul and they can borrow mineral owners money without their consent. Owing interest and must pay are two different things. The law says that the operator must pay interest if the mineral owner has marketable title but the operator frequently ignores the law because not much more will happen to them other than they will have to pay the interest if someone really demands it.
Production from the wells will eventually provide some cash flow so XTO will be willing to pay you, and another mineral owner will take your place waiting in line to be paid. I recommend steady inquiries and patience and they will eventually pay you. I know it doesn't sound like the way things should be done but it is the way it is.