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Permalink Reply by GoshDarn on February 6, 2012 at 16:40

Deborah:

In the good ol' days before the Haynesville S. came along -- most operators actually did mail a paper statement each month.

Now some operators try to cut corners to save money (and maybe also slyly try to keep folks in the dark, too) by either not sending out a paper "mailbox" statement or, y'know, by sending out an e-mail pdf attachment for the mineral owner to print out themselves at home on their own computer printers.

I always advise folks that if they're not getting a paper statement each month, then they should call the operator and request that one be mailed to them.  Then, if a person didn't negotiate a "free royalty clause" into their lease -- be prepared to suffer an epileptic fit over the pizzo of percentages being taken out vis-a-vis various deductions.  Me, I have no problem with the La. severance tax to support functions such as LSU.  It's the other ones that get my goat. 

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Permalink Reply by Henry on February 7, 2012 at 1:05

You should receive a monthly statement.  However, there are exceptions -- once you monthly payment goes below a certain value, the operator may send statements (and checks) only once or twice/year.

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Permalink Reply by Deborah Rowell on February 7, 2012 at 6:31

Thanks guys. So the statement should come from the operator instead of the lease holder? How much La. severance is taken out? Also, could you tell me how best to handle the taxes? I know it is treated as ordinary income but should it be paid quarterly? It is all so confusing!

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Permalink Reply by GoshDarn on February 7, 2012 at 8:22

Deb, as a landowner/min. owner -- my statements come from the operator/s.  I would assume that should also be true in your case, although if you're in a deal, not with the operator, but with a middleman/broker, I'm a bit unsure.

The sev. taxes work on a sliding scale, depending on production, is my understanding.  I have seen a rate of about 3.5% or so on some wells.  But it does vary.  Sev. tax is always taken out by the operator from get-go.  Not something you'll have to pay later.  And there's also a sev. rebate of sorts (in La.) on the super wells for a limited time until payout.  Hard to explain, but that sev. tax gets kicked back, sometimes one year or longer later by an operator, i.e., rebated back to the landowner, having initially been subtracted from the monthly royalty.

On the state and fed. taxes, there's a tax group on GHS.  But basically, it's usually done as a sch. B rent income, as I remember it.  Not that hard to fill out, really.  But if it's a large amount, you probably need to talk to a CPA or someone else.  Or maybe a GHS member will chirp up to help.

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