I am interested in hearing from members that have had their royalty payments suspended. I am particularly interested in knowing the company that pays your royalty and the company, if different, that operates the well(s) in your unit. Was your well sold to a successor company in the last 18 or so months?
Greg, the text of your reply is cut off on both side margins. I think I understand you explanation but if you could edit or repost, that would be helpful.
Skip, I have a well in Sec 9-11-14.
BHP Billiton /Petrohawk owns the lease but the well was operated by Chesapeake so the royalty checks come from BHP Billiton.
The well operation was sold to Indigo in Jan 2017. (I found this out from SONRIS) The royalty stopped coming in after Jan 2017 production was paid. So I waited for a couple of months as I figured it was taking a while for them to cut over to the new operator. SONRIS always showed production so I knew that someone should be paying. Called BHP and they insisted the Chesapeake operated the well and had not sent them any money. I have gotten this run around in the past with them so I am used to the game. I contacted Indigo requesting if they were the operator or owner of the well. They informed me that they were the operator. So I asked them for the money trail. Would they pay royalty owners or BHP. They assured me that BHP had the money. Contacted BHP and still got a run around answer. As I had a lawyer already working on other issues, I turned it all over to him to send them a demand letter. The end of Aug 2017 I received payments for Feb, Mar, Apr, and May production. The payments are still coming in though the statement still has Chesapeake as the operator.
My guess is that many royalty owners have gotten into the same issue due to all of the sales going on. If they don't keep a hard track of the royalty payments by production date and match production numbers to SONRIS data then money could be being held in the coffers until the owner of the well decides to pay.
Thanks, Greg. The common denominator behind the various tales of suspended royalty that I am running across appear to go back to Chesapeake and inaccurate original unit surveys. I suspect that the companies that acquired the Haynesville Shale units sold by Chesapeake were aware of this problem which may be exacerbated by the advent of Cross Unit Lateral wells. I further suspect that Indigo Haynesville and Covey Park were aware of the survey problems and required Chesapeake to perform new surveys before they started paying the unit royalty interests. You seem to be fortunate to have gotten a new survey in your unit so that BHP, and all the Working Interests in you unit, could go forward with regular royalty payments.
MB, when you get the chance I'd like to hear your experience.
Sorry for the delay/lack of followup Skip, no excuses & will do my best to post it later this PM.
Again sorry for the delayed feedback Skip & due to another early day tomorrow, let's see if I can give ya a thumbnail sketch.
Went to bed on 31 Dec. 2016 *assuming* I had a zero bal. w/ CHK, the same as it's been each month since 2010. After being unable to view Dec. revenue activity on CHK's WS, I called the owner relations center (1st week of Jan) & was told I was in suspense w/ CHK due to an overpayment by them on CHK operated well 631748 > Pankey 27-14-15 H1.
They stated my CHK balance was -$21,838.10. I discovered their policy when an owner's account is in suspense, is that the owner must call or email & request a negative suspense report for EACH month they are in suspense. The first (Dec.) negative suspense report was in excess of 80 pages printed, & the subsequent months were 102 & 40ish.
Quoting a 1 April 2017 letter I received from a CHK accounting supervisor, "The overpayment occurred when adjustments were processed to correct the revenue CHK Operating paid you for Dec. 2010 thru August 2013 production. Our DO dept. made an adjustment to reflect a unit size change increasing the unit size from 641.93 to 643.159 acres per new plat & updated title."
Expecting this negative balance to take almost all of 2017 to be offset by production revenue, I was stunned this past March when my account was out of suspense & back into a pay status.
Given my 2017 legal expenditures already incurred (shared w/ you the complicated ORRI from the 1950s) I've held off on having Rex delve into this CHK can 'o worms.
Sorry for the book, it's late & you have my contact info. if I can clarify anything.
Thanks. We're back to inaccurate original CHK unit surveys. I appreciate the detail and I'm glad you are back in pay.
Maybe, MB. I am trying to determine whether the bad survey problem is limited to Chesapeake or whether other original operating companies pulled the same shenanigans. Of course there are instances where units currently operated by other companies have bad surveys in units acquired from Chesapeake. So did SWEPI, Encana, Petrohawk pull the same stunt? Or just CHK?
If any members have inaccurate survey/royalty suspension stories to tell, please make time to do so this week. Thank you.
I own small bits of land or minerals scattered around Sabine and DeSoto, and get checks (not enough ownership to necessarily get checks every month) from Comstock, Vine, and GEP. Vine and GEP purchased the holdings on SWEPI and Encana. I've had no issues with these operators. And then there's CHK.
I've been in suspense from CHK for 3 years based on a revised survey plat. Incidentally, the revised survey showed the section change in total unit acreage was about 1%. The letter I got from CHK indicated that I was over-paid by more than 25% of the total royalties I had received. So, it turned out that the revised survey conveniently "gave" some of my acreage to a neighbor. I sent another letter, and they admitted the mistake, and said that they would review and revise their calculations. That was two years ago, and I've sent further certified letters to them but no response. I don't concede that there was an overpayment, but even if there was, it would have easily been paid off by now. They are sitting on my money, and if I don't sue them, then it will likely stay that way. Presumably, I can sue CHK over the accounting demand, and get my attorney's feed paid by them. But the well is now in its 8th year of production, so investing a lot of time and my own money in a law suit is not worth it; and CHK knows that, and that's why i am where i am. This property is in a good location, so maybe some day either CHK will want to drill a CUL or will sell these holdings to another operator.
Glad I'm able to have a job where I can hold my head up and look people in the eye, and feel good about myself at the end of the day. I don't see how CHK employees can do that. or if they even try.