Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on September 29, 2023 at 10:50

Question 1:  Send it ASAP certified mail.  Also send an email with the demand attached.  Be  a pain.  It's cheaper than paying an attorney, if you can avoid it.

Question 2:  I'm unsure how TGNR figures into the new Comstock wells.  Section 16 - HA RA SU55 is approved for "dual operators".  That means that EXCO is the operator of record on the Rives Etal 16 #1 (the original unit well) and Comstock is the operator of record on the Chap Hrs 27-22-15 HC #1-Alt and #2-Alt.  Comstock operates sections 27 & 22.  Technically EXCO would be a non-operated working interest in the two HC wells and could choose to pay the royalty interests in Section 16.  If EXCO is claiming that they have assigned an interest in Section 16 to TGNR, they should provide proof.  I do not find an assignment recorded in the DeSoto public records for such an assignment.  SONRIS doesn't list any well that TGNR has operated in the past or currently operates in 14N-14W.  I think someone on EXCOs end is confused.

By the way, it's TGNR, not TNGR.

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Permalink Reply by full name on September 29, 2023 at 12:19

Thanks Skip.  You always have good advice.

I have had good luck with demand letters to other companies. I will send one out early next week.

As for question #2.  Exco sold half its interest in most if not all its property when they were facing bankruptcy a number of years back. At one point Shell owned the half interest.  I can't remember who owned it before that but Shell bought them and did not want the gas portion so they sold to TGNR (I blame the TNGR on fat fingers).  There is a fault running through section 15 and Exco drilled several wells across 9 and into 15, up to the fault, a number of years ago.  The production has been split between Exco and now TGNR since they sold their interest.  I had figured that the south half of 15 was a stranded asset and would never be drilled.  When Comstock permitted the wells I had hoped that Exco would own all the production however the analyst was adamant that Exco only owned half.  For a long time Exco paid both halfs  but when TNGR bought Shell's portion they started paying their half their selves.  I will contact them again.

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Permalink Reply by Skip Peel - Mineral Consultant on September 29, 2023 at 12:26

Yeah, that half interest in Exco leases has had a long ride.  TGNR is drilling HA/BO wells in E TX as you can tell in my weekly rig reports.  I don't think the company has a legal reason for delaying payments. I'll look forward to the response that you get.  Good luck.

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Permalink Reply by full name on May 5, 2024 at 5:37

Skip - I finally have all the responses to the demand letters.  Here are the details:

Letter One- Comstock wells.  TGNR said they would pay by end of year.  Actually cut a special check on January 5 and amazingly it was correct.

Letter Two - Revenue deductions.  This was the most frustrating issue.  Received a response exactly 30 days after demand letter was received.  Unfortunately I used the word "deductions" in the title.   Their reply was "there are no deductions" and ignored the rest of the letter.  They did provide a phone number.  I called and a few days later I received a call from a division analyst.  She was no help but said to email her the details and she would send them to finance.  NOTE: TGNR blocks incoming emails to some of their employees.  Never heard back. Could not call her as the phone number was never answered  Additional emails and phone calls t others were ignored.

Letter Thee - Renamed the demand letter to "Revenue Restatement".  In this letter I went into great depth on what was missing, including calculations for both TGNR and EXCO on the reductions in question.  I made a request that TGNR conform to what I assume is an industry standard for revenue adjustment reporting (one line with the original statement that is negative and then the restatement with the new adjustment).  I  also included a summary of my attempts to contact TGNR and the lack of response.  Exactly 30 days later I received a response.

Bottom line is they reduced the price by $0.36.  Here is what they said about their statements:

"The detail provided by TGNR are the most granular that TGNR can offer at this time".  "The calculated price changed from $5.60 t0 $5.24. Although the check detail statement continues to show the same average price, the values and the calculations show otherwise"

I had to send two demand letters and they replied UPS overnight at the last minute to answer a simple question that should have been on the statement or at least answered by calling them.  A waste of time and money on both sides.

This in contrast to all the demand letters I have sent through the years where they either fixed the issue in the next check or called me and we discussed and resolved the issue.

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Permalink Reply by Skip Peel - Mineral Consultant on May 5, 2024 at 6:34

First, congratulations on being a squeaky wheel and getting some responses and adjustments.  Secondly, yours is a  prime example of how the O&G industry pencil whips mineral owners to enhance their bottom lines and tries to maintain customer service in a manner that makes most people give up and go away.  Short of those who can afford the services of experienced O&G attorneys and accountants, the only option is to do what you are doing:  keeping records of communications, making informed demands and not going away.  Consumer advocates and states Attorneys General should step in to help address these issues but the industry has bought off and owns the politicians that are required to make that happen.  Even the courts are subject to the influence of the industry and verdicts go the industry's way far more often than a just interpretation of the law would suggest.  I've seen it in cases I have worked on and those in which I have been an expert witness.  Right now I'm 0 for 5 including appellate verdicts although one has not been heard at this time.  That's 0 for 2 in federal court and 0 for 3 in state courts.  It is depressing to see how little opportunity there is for mineral owners to hold the industry accountable.  I commend you on your effort and persistence.

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Permalink Reply by Jimmy Hamiter on October 2, 2023 at 10:56

I've had issues with TGNR responding to my emails as well. At first, they were reasonably responsive, then crickets. I haven't tried the demand letter, but that's good advice. Good luck... to both of us!

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Permalink Reply by full name on October 2, 2023 at 12:13

I always add the following closing statement.  It gets their attention and they usually call and ask for a 30 day extension.  At that point you can actually talk to someone who has some authority.

I direct your attention to Louisiana Mineral Code Articles 137-140 which provide TGNR 30 days within which to supply the requested funds or show cause why that cannot be met, after which point TGNR will become responsible for all damages and attorney’s fees that result from failure to act upon this request.

As you said good luck to both of us.

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Permalink Reply by Skip Peel - Mineral Consultant on October 2, 2023 at 12:28

If anyone cares to read the articles full name mentions, here are the article titles.

R.S. Title 31, Article 137.  Nonpayment of royalties; notice prerequisite to judicial demand for damages or dissolution of the lease.

R.S. Title 31, Article 138.  Required response of lessee to notice.

R.S. Title 31, Article 138.1. Division Order; precedence of lease; penalties for failure to pay royalties due.

R.S. Title 31, Article 139.  Effect of payment in response to notice.

R.S. Title 31, Article 140.  Effect of nonpayment in response to notice or failure to state cause therefor.

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Permalink Reply by Jimmy Hamiter on November 27, 2023 at 5:28

Hi Skip. To the articles mentioned here, do you happen to have what coincides with these in Texas? I've done some research and couldn't find them. Bottomline: I continue to get the runaround from TGNR regarding a transfer of ownership of a well I own rights to in Rusk County. TGNR has verified I've sent all required documentation for this to be completed, but refuses to respond with any specific status. This has been going on since this past June and I'm fed up, to say the least.

I figured I'd just ask before going deeper down the rabbit hole, given your connections.

Thanks!     

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Permalink Reply by Jimmy Hamiter on October 2, 2023 at 15:52

That's great. Thank you!

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Permalink Reply by Skip Peel - Mineral Consultant on November 27, 2023 at 6:07

Jimmy, there is a world of difference between mineral law in Texas and Louisiana.  In addition, the Texas Railroad Commission is even more "friendly" with the industry than the LA DNR, Commission of Conservation.  I don't keep up with Texas as much as I do with Louisiana. 

In some cases, as much as they may rile your sense of fairness, trying to get assistance from the state is like tilting at windmills.  The only rational way to pursue this would be to gather enough TGNR lessors as co-plaintiffs to hire a really good O&G law firm.  An experienced firm could give you an idea of your chances of prevailing in court and how much it might cost to pursue litigation if it comes to that.

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Permalink Reply by Jimmy Hamiter on November 27, 2023 at 6:13

Thanks Skip, I own rights in Louisiana so I hear you about the differences. I'll mull this over, keeping after them, and hope that it doesn't turn into a messy legal matter!

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