Replies to This Discussion

Permalink Reply by HBP on February 13, 2015 at 8:54

all things considered, 7 months is long, but is not out of the ballpark for a lessee to remit non-operated production.  You can always send a request for payment into your lessee in accordance with the mineral code and they will have to respond within 30 days.

Have you or your sister received any div. orders for the production that started in July 2014.  

This should can be addressed fairly easy, but know that your lessee has to answer to you first before anyone else (operator, etc...) on royalty, and also remember that it is their responsibility to ensure they get the data from the operator needed to pay you on the production.

• ▶ Reply

Permalink Reply by Spring Branch,mineral owner on February 13, 2015 at 11:16

Read your lease.  An Exhibit A will typically have language that states if the royalty is not paid within the 90 day period (in your case)........... that the Lessee is required to pay a legal interest rate (varies by state), or x%, whichever is the higher.  So they may owe you interest on the money if payment is delayed.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2015 at 11:39

I agree with SB but would add that a demand letter for the interest owed on production not paid within the 90 day period will be required if indeed your lease contains that language.  Don't expect your lessee to pay it without being put on formal notice.

• ▶ Reply

Permalink Reply by Abbie Levy on February 13, 2015 at 11:53

Thank you both for your reply.  I received the division order in October around the time Andarko paid me the first royalty payment by mistake. Once they realized they were not suppose to be paying our royalty they told me to discard it. We have received nothing from Petrohawk. I realize the lessee has to answer to us first ,but unfortunately they have not done so. I have been assured by my contact at Andarko that Petrohawk has all of the information concerning this well and the money to pay the royalty. As far as sending the "request for payment" that is probably my next step. I would just like to think this will be resolved sooner than  another 30 days. 

Yes.....I have read my lease and it says exactly what you have mentioned. I would feel much better if I had a good contact person at Petrohawk , as I do at Andarko and JW, but so far I can't seem to get anyone to answer phone calls BHP's owner relations has been terrible. I was told it would be at least 3 months before someone would get back to me. I am not sure why Petrohawk decided to pay our royalty on these particular wells. Even though they have our lease they have never paid us our royalty.

• ▶ Reply

Permalink Reply by Jesse Joyner on February 14, 2015 at 2:30

First, it should be noted that there are other landowners who are involved in the exact same circumstances since this isn't unique to your mineral estate, Abbie. The Elm Grove Field sections that encompass the transfers between APC (Anadarko) and BHP (Petrohawk) actually are affecting all of the royalty owners in the producing units.

Have been familiar with the particulars for quite some time.

Here's another perspective. As best as I can understand it from discussions with certain entities about this issue, BHP is close to setting up the decks on putting the royalty owners in pay per the transfers over to Petrohawk/BHP (which is all one company since HK and KCS are subsidiaries of BHP).

Thereupon, you can send a demand letter or contact a lawyer; but you could also wait until the next royalty pay cycle to see if BHP steps up and does what their hard-working land dept. says that the Aussies will be doing.

Paying a lawyer might work, of course. But it will also cost you some money.

Again, since there are numerous mineral owners in the same boat as you in these particular sections, some of them are, indeed, willing to wait a bit longer before they lawyer up to press the issue.

 

• ▶ Reply

Permalink Reply by Abbie Levy on February 14, 2015 at 3:28

Thank you for your reply.  I was aware that they were setting up these decks but it has been  a while since I first heard that. I am aware that we are not alone in this. I would imagine if I had not received the payment from Andarko that my sister did not receive this probably would never have been an issue because we wouldn't be aware of it. Petrohawk has never paid our royalties before even though they have our lease.  With the first Haynesville Shale well we were paid by both JW and Petrohawk on the first royalty payment. There had  been a communication issue between these two companies and Petrohawk did not know JW was going to be paying that royalty. For those of us who are not so knowledgeable about the oil and gas industry it can sometimes get confusing  when there are three different companies paying royalties.

• ▶ Reply

Permalink Reply by HBP on February 14, 2015 at 7:38

30 days is quick if it solves the issue for past royalty and sets it up correctly for the future.  I echo your issues with BHP owner relations.  Many other companies, not just in the Haynesville, have limited or otherwise slow owner relations depts.  However, they get much quicker with the right kind of demand, or if an attorney is addressing it.

Getting assistance by an attorney to have royalty paid accurately and timely is not expensive (assuming no other issues) with attorneys who do this often.    

• ▶ Reply

Permalink Reply by Jan Holland on February 20, 2015 at 9:58

Have the royalty owners in the Elm Grove Field formed a royalty owners association?

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on February 20, 2015 at 10:41

Jan, not that I have heard of.  There is however a Louisiana Chapter of the National Association of Royalty Owners (NARO).  Here is a link to the chapter website:

http://www.narolouisiana.org/

• ▶ Reply

Permalink Reply by Jan Holland on February 20, 2015 at 11:17

Thanks Skip. It is best for ROs in a field/unit to form an association. It makes auditing and legal business easier for costs participation.

Regards,

Jan

Linkedin Profile

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on February 20, 2015 at 11:25

You're welcome, Jan.  I agree on field/unit associations however I know of none so organized, only NARO.

• ▶ Reply