Replies to This Discussion

Permalink Reply by Ben Elmore on February 19, 2011 at 4:52

Here is a link to the statute governing DOs. Texas Natural Resources Code 91.402.

http://www.statutes.legis.state.tx.us/Docs/NR/htm/NR.91.htm#91.402

Permalink Reply by Spring Branch,mineral owner on February 19, 2011 at 9:12

Ben, I am not aware of anyone in the Texas Haynesville Shale who has either received a DO or been paid royalty within 120 days of first sale.  I am much more familiar with folks (myself included) who are still waiting for a DO and royalty check 6-9 months after first sale.  That appears to be more the standard.  An example would be Common Resources/Exco Resources Owens # 1-H #405-30310.   It IP'd @ 21.256 mmcf/day on 6/8/2010.  Not sure when 1st sales was but I bet it was more than 120 days ago.  No Division order/no royalty check!

Permalink Reply by adubu on February 19, 2011 at 10:35

Ben--- then interest due penalty is it determinted by your written lease or State law--assuming it has cleared title opinion review and operator does not have some other legal reason to hold your royalty payment? And what reasons other than title clouds could delay payment. Some leases require payment with in 90 days to sales for NG.

Permalink Reply by Ben Elmore on February 19, 2011 at 10:42

SB and Adubu, you must write your lessee and demand an explanation. They are required to provide you one within 60 days unless your lease provides otherwise. If you are unsatisfied with their response your remedy is to bring suit. You can recover interest and attorneys fees if they have failed to properly account to you.

Permalink Reply by Etola on February 19, 2011 at 19:08

Ben, we have an interest in an oil well that was drilled in Feb 2010 and put into production in March 2010 by Ellora. Didn't hear a word from Ellora about the well. Then Ellora sold out to XTO in August.  We got a letter from XTO explaining that they had bought out Ellora and they referenced the shallow gas well that we had been receiving small checks on for the past 12 years but did not mention the oil well.  I called XTO in September and asked about the well and they said that due to the buy out of Ellora that they were reviewing all titles who had interests in the well. We haven't heard a word from them except from other neighbors who have called to inquire about it also. XTO hasn't sent a letter explaining why they are not paying royalties on a well that was in production since last March.  They also have not sent any royalty money for the shallow well since they bought out Ellora. Can they do that? And for how long? 

Permalink Reply by Ben Elmore on February 20, 2011 at 4:52

I would send them a letter via certified mail and ask for an explanation as described above. There may be a legitimate reason for the delay. Absent a good reason, I would not think the statute or your lease would permit such a delay. Send them a letter.

Permalink Reply by little ole 1st grade teacher on February 19, 2011 at 21:23

Question:  Do you ever get a  royalty payment without a DO being sent to you for you to sign???

Permalink Reply by Ben Elmore on February 20, 2011 at 4:55

Sure but I would think it is very rare, and when it does happen, it is probably a mistake on the operator's part. The DO provides the operator protection against claims that they have not paid on the correct decimal interest, among other things.

Permalink Reply by SLC on February 22, 2011 at 9:31

 

Hi Ben and everyone else-

My family and I have interest in The Butler Rooney Unit and are leased to XTO. The well started producing in October 2010. We are new to all of this mineral rights business and none of us live in the state of Texas. We have been told by people at XTO that they are still working on curative title work and therefore they have not been able to complete DO on the unit. My question is: Is there a time limit on when DO must be done and is there something else that we should be doing to keep updated on the DO and royalty payments? Any advise would be greatly appreciated. Thank you,

Sue

Permalink Reply by Ben Elmore on February 22, 2011 at 11:03

Because they are working on curative title, which has been known to take awhile depending upon the complexity of the title involved, they arguably can hold all royalty money in suspense until they are done.  There is not really a time frame they must comply with.  One might argue that once they cure title for your specific tract, then they can accurately calculate your decimal interest in the unit and they should send you a DO and release your royalty.  You might ask what their policy is in this regard.

Permalink Reply by SLC on February 22, 2011 at 11:29

Thanks Ben

Permalink Reply by adubu on March 20, 2011 at 9:26

Ben-- what the status of limitation if later you discover error in title of mineral interest used to calculate royalty decimal interest on the DO? For example you find you had 75% ownership in tract of minerals rather than 50% as result you royalty increases 50% in amount. How many years can you claim underpayment and who owes royalty owner the money that has been underpaid?

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