Replies to This Discussion

Permalink Reply by DrWAVeSport Cd1 on August 24, 2011 at 6:24

Skip,

Completely agree with you.  Lawyers I have respect for.  Doctors I have respect for.  Landmen I have respect for also. 

That said, Each profession has huge numbers of examples of misusing and abusing their "clients" best interest.  Most are honest and practice their profession with integrity and maintain good reputations, again my opinion.  I always find professional that gets a "good" rating from my own friends and family members, not through some 3rd party hearsay.

I guess had every mineral owner in the HS found a "good" O& G attorney to negotiate their lease, would have cut down the need for GHS info.  LOL

Thanks Skip, I always read your GHS comments and respect your points of view and informative help for Shalers.

DrWAVeSport Cd1  8/24/2011 

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Permalink Reply by DrWAVeSport Cd1 on August 24, 2011 at 6:38

Skip,

As you say...  I wouldn't seek out a Nose and Throat Guy for a kidney stone!

LOL

 

Have a Good One Skip.

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Permalink Reply by fullofgas on August 24, 2011 at 6:21

I am hopeing that just by their company being discussed over the internet and seen by millions that it may change their outlook on how to proceed for the sake of the royalty owners. I also think that contracts should be worded to say if the well is producing then the royalty owners Must be paid, if not then the well must stop all production until the problem is solved. I think this wording would change some things maybe for better.

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Permalink Reply by smith1 on September 12, 2011 at 4:24

How can I get in touch with JW operating about the Kinsey well? Several folks have rec'd checks but we have not as of yet.

Thanks.

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Permalink Reply by Skip Peel - Mineral Consultant on September 12, 2011 at 4:27

J-W royalty statements include the following phone number:

 

866-299-8191

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Permalink Reply by smith1 on September 12, 2011 at 4:31

thanks

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Permalink Reply by Dion Warr, CPL on August 24, 2011 at 11:12

Fullofgas:

 

First, a couple of questions-

 

How large of a tract do you own in this unit? Is it one of the subdivision lots, or a larger tract?

To confirm, your lease is for a 25% royalty?

What do the letters say, exactly?

 

I ask these questions because what you are describing may be very common issues associated with getting a royalty deck straight.  Companies very commonly direct their landmen and abstractors to first run title only to an extent that they would feel comfortable buying leases.  Upon drilling a well or pending a completion of a well, the company will then direct their title people to assemble abstracts of title for the purposes of having a title attorney render a title opinion which directs the company as to who to pay.  Not all companies follow the same procedures, but in a unit that contains many subdivision tracts, the title work can be extensive, and the attorney must be provided sufficient documentation so as to opine as to who owns what.  Very commonly, smaller tracts are run out last.  J-W may have very well tried to set up an initial pay deck based upon their files, and then as the attorneys began to examine title, they realized that they may have had some issues, thus causing them to send out any manner of correspondence.

 

J-W operates hundreds of wells in Louisiana, as well as other states.  They are ranked amongst the largest producers of onshore gas in the state.  As a privately held company, there are no shareholders to impress, and their gas flows appear sufficient to suppose that holding your royalties would cause any difference to them.  They are actively paying on hundreds of other wells.

 

Look to your lease as to your terms.  Royalty is defined as due to the owner in most common lease forms, but does not state specifically as to when it is paid.  As the lessor must first look to its lessee as to payment, it is incumbent upon you to inquire and correspond with J-W prior to filing any type of proceeding or pursuing them administratively (through DNR, for instance).

 

If your tract is a smaller tract, it is standard practice for the companies to hold royalties until the balance reaches a certain value (like, say, $100.00) prior to disbursing a check.  Also, you should execute the division order letter (check all of your information and your stated interest; if you don't know how to calculate this interest, ask) and send it back forthwith so as to facilitate them getting you into a pay status.

 

I am not a lawyer, but am intimately familiar with these issues as a landman.

 

Let me know if this helps, or if you have any other questions.  If you wish to speak off forum (as to specifics, etc.), I can be reached via message on GHS.  GHS contributors generally appreciate general questions to be posted in the discussion, as there are no doubt members that have similar concerns that may be able to learn from reading the threads.

 

Good luck to you.

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Permalink Reply by fullofgas on August 25, 2011 at 5:04

I understand that a lot is involved regarding title searches and division orders and so on, but I also think that 3 years time frame is long enough for all that to happen. The end of 2011 will be 3 whole years that JW has had to figgure this out. I only have a 2 acre tract but even at the 4 to 5 mcf a day, the checks I did receive were over 400 dollar a month. We leased because we are retired and we really needed a steady flow of money from another source like this one. 400 to 500 dollars a month at the low price of 4 dollars is pretty good income, if you can get it. If it goes up to 8 dollars, or 12 like it was 3 years ago, that income increases by double, then triple, which would be great, but then again, IF you can get it. My last email to JW owner relations has yet to be answered so as of right now I dont know what they have to say about our concerns.

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Permalink Reply by Kat Bloomfield on August 25, 2011 at 6:17

emails and phone calls can produce information.  Certified mail sometimes gets more results. 

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Permalink Reply by Dion Warr, CPL on August 25, 2011 at 10:47

Fullofgas:

 

I understand the frustration.  One of the main points of my post was to let you know that O&G companies do not routinely commission pre-production quality title work (be it full mineral abstracts of memoranda of title) until such time as the well is to be drilled, is drilling, or production is eminent.  The costs associated with this work is prohibitive unless revenue is forthcoming (from a producing well).  Companies by and large do not commission this work at the time that leases are obtained, even if they are confident that a well will be eventually drilled.

 

Additionally, the unit size is not known officially until a unit survey plat is commissioned, as directed by the field order which creates the unit.  The "640-acre section / unit" is more of a guideline in NW LA rather than a strictly-held construction.  The sizes of sections vary, and since many of these units are based upon section size, so too the unit sizes vary, typically up to ±10%.

 

Please note that unless you have a lease provision that requires the timely payment of royalties as a condition of maintaining the lease in good standing, the context of "royalties being x number of months behind" is a moot point.  Failure to pay a rental that is due in a timely manner is fatal to the lease; failure to pay a "timely royalty" is not..   UNLESS... it is so defined [timely payment of royalty] in the lease agreement and such conditions are not met, or, after the lessor has diligently pursued the matter with his lessee according to the provisions in the Mineral Code, neither a satisfactory reason for delay nor a timely payment made upon being given prescribed notice and/or demand (by registered or certified letter) and a reasonable time for response having elapsed (thirty days).  As a word of caution, this process is dictated by the Mineral Code, and if one does not substantially adhere to the process set forth, it could very well result in the thwarting of your ability to collect your royalties. 

 

Based upon the assumptions that (a) you have full mineral rights in and to the two-acre tract, (b) your lease provides for a 25% royalty, and (c) your unit size is approximately 640 acres, your interest in the unit should be approximately [2 ac. / 640 ac.] x 100% min. ownership x 25% RI = 0.00078125.  If this is reasonably close to what the company shows, verify your personal information (again), confirm your SSN / Tax ID (again) and send in the DO letter (again).  Make sure to save a copy of the letter and the date that you sent it in your records.  While the execution of a DO letter is not prerequisite to your collecting your royalties (provided that it can be proven that the company has or should have all of your relevant personal information), it is advisable to have proof that you have complied in every way that you can in providing said information should it come down to a legal proceeding.

 

Again, good luck to you, and fire away if you have more questions.

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Permalink Reply by Kat Bloomfield on August 24, 2011 at 13:55

Years ago, I posted a guideline to what landowners need to do to preserve their claims.  The mineral code is fairly specific on the demands a royalty owner must make and how.  I highly recommend a read of the pertinent provisions, contained both in Title 30 and Title 31 of the Louisiana revised statutes.  They can be found on findlaw.com 

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Permalink Reply by Dion Warr, CPL on August 24, 2011 at 14:33

Kat:

 

Very much agree.  Your entry is comprehensive, superbly referenced, and written well for the layman, the lawyer, and the landman.  It is a must read for any member steeling themselves for life as an owner in a producing oil and gas unit subject to LA law, rules and regulations.

 

As a service to the thread, here is the link.

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