i am in a CV unit in texas and recently received a new division order to sign. the new DO accounts for the addition of 4 acres to the unit. this unit has been in production for about three years. i have it on (pretty good) authority that this would be a rare occurrence and that all interest owners must agree and the royalty must be adjusted all the way back to the beginning of production in order to redistribute the revenue according to the new division.
does anyone else have experience with a situation like this?
thanks for the reply jhh. i hadn't thought about amended taxes, now that sounds like a head-ache. when i asked a few questions about this proposed amendment, the company rep. became irritable and combative and finally said, " you don't have to sign anything", well, at that point i stopped listening. and i should mention, there is a list of clauses at the end of the page to which one agrees to upon signing...dirty pool if you ask me.
Unfortunately, you should suspect everything. I'm not sure the Reagan approach... "trust but verify" works anymore.
i couldn't get a straight answer. i was told that was a technical issue at one point and a survey issue at another point. then, that is when the person became irritable and told me i didn't have to sign anything...they are only trying to add 4 acres to a 600 hundred acre unit. it wouldn't make much of a difference in the overall division, but what i am skeptical of is the clauses at the end of the amendment. smells like bad fish to me !
after giving this matter some thought, i have decided not to sign anything. i notice the decimal has already been adjusted and applied on my last three checks. it's the clauses that i believe is motivating this company, and oh, did i mention their name? encore/denbury/ whoever just bought them out. their office is the absolute worst RR, i have encountered. with that said, i don't have any leases with CK...lol
Not so unusual for me- old surveys are often corrected using GPS to get the most accurate results. A new survey can result in a shift of the division orders.
TXRRcom will eventually force a redistribution, but you don't have to worry about tax adjustments. If you are in the positive you simply report this as royalty in the year you receive it. If you come out on the negative side it will wash out with a smaller amount reported as royalties from the same producer on your 1099.