Shirley, Thank you for sharing your info. Certainly the laws in AR and LA are very different, as pointed out by Les B. Your info will be helpful to me as I own land in LA and Ar.
About 10 years ago i went non-consent with Fina and I did not recieve any royalty payment until well paid out. After payout I started to collect as a working interest owner. Had the well not paid out I would never have recieved any compensation at all. This type arrangement is often referred to as 100% penalty. Fina only recovered what I would have to have paid for my share of drilling costs upfront and risked paying for my share of a dry hole.
I think you did GOOD! Congratulations.
No one has mentioned a Joint Operating Agreement which may have been signed by your late Father.
If a JOA exists you should be able to get copy from operator. If one exists this is the place to start to untangle this. There are too many possibilities to sort out without this document. Rarely I have seen cases whre no JOA was ever drawn up and signed. If you are lucky you may find there is no JOA. BTW, you do need good lawyer.
One does exist and R. Michael McPhetridge, V.P. of Land with Bonanza Creek Energy, Inc. would likely be happy to send her one if she requests it, which I did several years ago. All of the coorespondence Shirley has received from Bonanza Creek has been in line with the JOA, because I receive the same coorespondence and have a copy of the JOA that her grandfather would have signed probably 40 years ago.
shirley---- there are several thread on this site that discusses ULMO. Just type in ULMO in this sites search and you can read through them for some additional information
Spring Branch appears to be most in tune with your predicament. The unleased mineral owner (which you are apparently not) is entitled to a 1/8 royalty before payout. The non-consent WI owner (which you apparently are) is entitled to receive a 1/8 royalty to pay royalties due under the terms of their leases. If you are receiving royalty on these wells I would be wary about spending it, because it appears to me (I am not an Arkansas attorney, btw) that you should be paying that money to your lessors.
Where did you get the 300% penalty from? That would be true if you were in Louisiana (actually a 200% risk fee plus 100% cost recovery), but in Arkansas there is not a statutorily-fixed risk charge of which I am aware. The applicable Arkansas statute (pasted below) merely says the recoupment would have to be an "amount equal to the share of the costs that would have been borne by the nonparticipating party had he or she participated in the operations, plus an additional sum to be fixed by the commission." Did the commission assign a 300% penalty in your integration order? These questions are probably best answered by an attorney familiar with Arkansas Conservation and Oil and Gas law.
The AOGC hands out 300-400% penalties on every non participant in every forced integration. RI and WI included. It is like candy at Halloween. Just look at their site.
I am Shirley's Sister. Spring Branch and I have already had a conversation about this before. It was inherited from our Father and GrandFather. It is working interest in this County in Arkansas. She is getting a payout. I am not as of yet because I did consent. As far as her payout she is getting is coming from the previous wells that have already been producing and we were getting revenue from those particular wells before they started opening up all of the new ones the last 3 years or so ago. If I am correct she will still keep getting that revenue from those wells, but not the ones that she went non consent. She will have to pay the penalty from each well that was recently opened. That would mean say for instance.. Well #66.. She will not see revenue from that well until her penalty is paid, which they would only penalize her for that well and the money to pay back the penalty would only come from that particular well, which is why she will probably never see in revenue from it.
Not the other ones that she had producing before. That is why she is getting her revenue checks. Am I correct?
Penalty is put in a operating agreement to keep people in or to get them out. It can be 100% or 500%. If there were no penalty and a working interest owner went non consent and the other working interest owners had to carry him with no benefit to them selves there would be a lot of non concent working interest owners, thus the penalty. Bobbie you are right.