We have been getting royalty payments $15,000-20,000/month on a monthly basis from TG Natural Gas resources for over two years. We received the last check in November...none in December which is highly unusual. We finally heard back from Owner Relations at the company today.
They said they would not be sending us anymore payments as we had been overpaid for a "long time". They said that they would start paying us again when we had paid back what we had been overpaid. When we asked how much we had overpaid they said " a lot."
Is this OK for companies to do? We have not received any documentation from the company saying we were overpaid so they were not going to be making payments from now on.
Any advice is appreciated.
You should receive a statement that makes the situation a little more clear. Your operator should provide an explanation for the over payment. I suggest you send them a certified letter demanding to have an accounting. Although the specifics of the claimed over payment are unclear at this time, this is not a rare occurrence.
One way in which this can occur is though an inaccurate Division Order analysis. Those occur more often than they should and are often not evident until someone challenges the underlying mineral right. I'm dealing with some similar issues currently where a Haynesville operator overlooked an old lease that was still in force and gave a mineral owner a new lease. The old lease had a one eighth royalty and the new lease had a quarter. The mineral owner has been over paid based on the new lease and will have to forego any future royalty payments until the over payment is rectified. Without some specific detail, it's impossible to provide a more accurate opinion.
That is such helpful advise, Skip!!!! Much appreciated....I'll share any outcome as we get it.
You're welcome, Ellen. There can be other reasons. Sometimes royalty payments go on hold when an operator is transferring their assets to another operator is one example.
Thank you, do you perhaps has a recommendation for an oil gas attorney? We live in the Dallas area and the wells are in Panola County on the Texas side of the Haynesville Shale. PM if you prefer?
Yes, I can refer you but I suggest some interim steps. Post the well name so we can check to see if there is any information in the public record. Log in to your EnergyLink.com account and use the option to "contact your operator". TGNR uses the EnergyLink website to provide royalty owners with their payment details. It will save time and money to know the nature of the problem if possible before contacting an experienced O&G attorney.
We have the revenue statements from energy link. There are multiple small wells that produce various amounts. The combined revenue from all these wells ends up being about 15,000 month. One example of a well is Kyle, Fred A-06T that produced 198.69 in plant products and 65.30 in Residue Gas in September of 22. We received the royalties for that in November of 22.
Have you ever attempted to contact your operator through EnergyLink? Considering that your royalty comes from multiple wells, this may be a payment delay due to a change of operator. It is common for there to be a couple of months delay in resuming royalty payments when that happens. A lot of accounting review is involved in the process. The November payment would likely have been for production in the month of September. Is that the case in your EnergyLink revenue statements?
Yes, that is the case. We have not contacted them through Energy Link. We spoke to owner relations over the phone. They said that they halted payment as we had been overpaid "a long time" and our overpayment was "a lot."
This happened quite a bit when Haynesville operators started drilling long lateral, multi unit wells. Original Division Orders were based on flawed ground surveys. This was known but less of a problem when horizontal wells were drilled within the unit boundaries.
Although this is not your situation, I bring it up because when this happened mineral owners were issued many page revenue statements that evidenced the over payment problem back to first production. Some of those revenue statements were thirty to forty pages long. That is what TGNR should be providing as opposed to just saying you were overpaid. I suggest you demand an explanation of how the over payment occurred and an updated revenue statement from owner relations. Once you get that statement, you can have an O&G attorney or forensic accounting firm review it. I can refer you to either one.
We had a similar issue... over payments on two Wells resulting in no payments for 28 months.
Should have added Producer... it was Devon up in Shelby County
Did Devon send you a revenue statement detailing the over payment? That should be the minimum expected. I would also seek an explanation for the title issue that caused the over payment although I think most operators would decline to go into that without being compelled.