Replies to This Discussion

Permalink Reply by robert minton on April 14, 2012 at 15:22

No. But, the longer the money is in the operator's bank, the longer he is paid interest on the account. Pretended "title problems" have gotten a number of operators in serious trouble.  If the heirship is known, well enough to send out division orders, the proportions are already known and payment can be made to each one who returns a DO.

 

 

 

 

 

 

 

 

 

 

 

 

 

DO.

 

 

 

 

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Permalink Reply by Ken Boone on April 14, 2012 at 23:51

By "paperwork", I mean their affidavit of heirship for their deceased parent who was the daughter of the owner.

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Permalink Reply by robert minton on April 15, 2012 at 13:37

That is just one branch of the family. No reason to hold up the other payments

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Permalink Reply by VSC DeSoto South on April 18, 2012 at 2:00

Does the land in question have a active currently producing well? How much time has passed since the well was started or completed and the oil and gas company contacted you to complete the Div. Order or affidavits? I am wondering. I know someone with a small part of a property where there is a currently producing well, Dec 2011. The family which most of the reletives do not know each other or even that the others exist, it is quite a mess. THe person I know informed he Oil and Gas compnay that they believe they have a small piece of the ownership and sent some information on basic ancestry. Oil company acknowleged receipt and replied they would not do the complete title search or affidavits or D.O. until the well pays out. At the current gas rates that will take a while. Does that sound fishy? Should the person get an atty and demand some action to determine ownership?

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Permalink Reply by Ken Boone on April 18, 2012 at 3:37

I am new to all of this myself. I am still learning terms, state codes, etc....

In my situation, the well was completed last year in January 2011. It is really getting quite ridiculous. The gas company already knew who the heirs were. Initially, all the heirs were not listed on the affidavit of heirship. But once they were, I don't get what is taking so long. 

The company is waiting for the "interest to switch over". I still don't know why it takes 60-90 days. I guess they have to research to be sure the heirs are who they say they are. Don't start me to lying.

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Permalink Reply by Skip Peel - Mineral Consultant on April 18, 2012 at 3:53

Identifying all legal heirs is only part of the puzzle.  If there are no probated successions or judgements of possession that clearly spell out who gets what, there is still the question of determining the ownership interest of each heir especially in cases of multiple marriages.  Even though there is a three year statute of limitations governing most royalty income operators do not wish to pay the wrong parties or pay them based upon an incorrect decimal interest.  This is a common problem for families that did not create proper public records evidencing their real assets down through the generations.  Considering the avalanche of title due diligence required by the Haynesville Play it's not surprising that some difficult chains of title are relegated to the bottom of the stack.  Sorry, Ken, but it's a good object lesson for members who find themselves in a similar situation. 

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Permalink Reply by Ken Boone on April 18, 2012 at 4:14

I forgot about the ownership interest. Yes, by all means they should take their time and get it right. But not too long. ;)

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Permalink Reply by VSC DeSoto South on April 18, 2012 at 8:32

So if the well started producing in Jan 2011 then it would not be unreasonable to have not heard anything yet? Especially if there is no recorded title updates or successions or wills? What you are saying is they could be figuring all that out still? When should one to begin be worried they are being left out? If they have 3 years to figure it out, at the 2.5 year mark?

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Permalink Reply by Skip Peel - Mineral Consultant on April 18, 2012 at 9:40

The first thing to keep in mind is that for some Haynesville operators there is little or no correlation with a well being turned to sales and the division order being completed.  I understand that laymen mineral owners think there is or that there should be. 

Consider this:  In less than four years there will have been approximately 2400 Haynesville Shale wells completed or drilling.  Here are the major operator numbers;  Chesapeake - 719, EnCana and SWEPI - 389, Petrohawk and affiliates - 314.  Heck even EXCO has drilled 331.  Although the number and complexity of ownership interests in a given drilling unit can vary widely in general a thorough title review, curative, title opinion and accounting set up can take a few weeks or a few months for each unit.  The legal firms or departments that turn out Division Orders are not sitting around waiting for the go ahead to begin a review for a unit with a producing well.  That well simply joins the line of those previously submitted.  And the line can be quite long.  VSC, it may be that "they" haven't even started on it yet.

If you are in a unit with a completed well by one of these operators you can be in for a wait.  However the decline in drilling will soon allow the whole process to catch up.  By all means call to check on progress and send a certified letter requesting interest on any royalty delayed over 120 days but have patience and understand that the number of wells drilled in a relatively short period of time has taxed the system and made for longer than normal delays in getting wells in pay.

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Permalink Reply by Stonewall on April 18, 2012 at 11:05

Skip,

If I were to write a letter to an operator requesting interest payments on royalties delayed over 120 days, what should the interest rate be?   I'm thinking that if I were to send such a letter, the operator might pay such a ridiculously low rate it might not even be worth it.   Do I need to ask the operator to pay me a certain rate like 7 or 8% interest?

Just Curious,

Stonewall

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Permalink Reply by Skip Peel - Mineral Consultant on April 18, 2012 at 11:23

Stonewall, the state sets the interest.  And there are a series of steps required in the process.  I'll see if I can find the Regulatory Statute in the LA Mineral Code.  We have addressed this issue before so there are likely one or more discussions in the site archives.

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Permalink Reply by Stonewall on April 18, 2012 at 11:30

I see.   Well, I'm in the state of Texas so I guess I need to check on the Texas

statutes.

Thanks Skip.

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