Oil well producing since August and still no royalty checks! Please help me understand this!
I have mineral rights on an oil well in Arkansas that has been producing since last August ( stats are on the Commission web site) and still have not received any royalty payments. I was told in November by the operator there was a holdup because one of the heirs holding mineral rights could not be located. After five months I call back and was told the checks were just sitting on the desk but they were waiting on a title opinion. I was told this again last week. Would someone please tell me what a title opinion is? That sounds like something that should have already been taken care of when the leasing took place. I have heard that to hold up royalty payments because one person in the group can't be found is ridiculous because their royalty payments can simply go into an escrow account. 10 months of production and no royalty payments - is this fair?? And of course I have not received a division order yet. Is this typical in this business?
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Replies to This Discussion
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Permalink Reply by The_Baron on -
I was involved in a well in arkansas once where it took eight months to get a title opinion. Title in Arkansas can be tricky, the courthouses are garbage, and many of the abstract plants have been taken down by greedy big companies like CHK and EOG.
The Division order title opinion is very intensive and expensive and is usually only done after a well is made.
I would suggest that you send a certified letter to the operator requesting your royalties. Be aware that you could be liable for repayment of any royalties if for some reason you are overpaid (or you were due no royalties at all).
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Permalink Reply by 221caribbean on
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Baron - what do you mean by many of the abstract plats have been taken down by big companies like CHK and EOG? Also what is a title opinion? Does that have anything to do with the "missing heir" who can't be found?
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Permalink Reply by The_Baron on
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sorry for my typo, I have corrected it,
An Abstract Plant is a private company who has taken the public record and more fully organized the chain of title. They provide a service to attorneys and landmen for a fee.
Many courthouses in Arkansas have very badly organized records or indexes. Somtimes the abstract plant is the only way to decifer a title.
In order to eliminate potential competetion some big players have "taken down" or in laymens terms, bought exclusive rights to these records, sometimes the whole plant, somtimes just for a certain area. Now the can do their title work, and make it very difficult for competition to get in and work their area.
A "title opinion" is a detailed document prepared by a title attorney that breaks down every ownership interest in a tract or group of tracts.
I would say that a "missing heir" should not delay payment. A interest for someone who can not be located could be handeled by simply taking a receivership lease, or if a lease is already in effect, by escrowing the royalties for the missing heir. Arkansas has laws in place on how to handle these situations. However, if the ownership is unclear... that could delay a title opinion.
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Hmmmmmmm. I did get a call from the abstract company about a month ago, after I complained to the operator, saying they were working on locating the missing heir. So is the division order the same thing as the title opinion? I have always been under the impression that complete and correct information on all heirs had to be in place before leasing could take place. I guess not. Thanks so much for your input. :-))
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Permalink Reply by The_Baron on
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A O&G company will get the best title they can before leaseing, no one wants to buy a bad lease. But for a division order its got to be as complete as possible. Also, many time some interests will go unleased, or are simpky impossible to locate, this happens fairly often when dealing with perpetual minerals.
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Permalink Reply by Neeky on -
We have a similar situation. They are still running title to confirm owners and royalty interest. Well has been producing since last August. I have talked to the Land Dept at the company multiple times and they say they can't do anything until they get title.
You might look at your lease and see if you have any language in there concerning payments and how quickly they should be paid AND if you get paid interest on any payments made after that payment period. The language might exempt them in cases of title still being in progress.
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Permalink Reply by Mac Davis on
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We need to have something like prime +10% interest rates on any "held" funds for mineral payments. That would speed the process along.
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Permalink Reply by Kat Bloomfield on
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I completely agree. Operators can hold royalties and they do so in a general account. It's not even held in separate account, although it sounds like they do when the term "suspense" account is used. There is no separate account. interest does not run. If operator goes bankrupt, good luck finding your funds.
Check the mineral code, and follow it to a TEE and send a letter, that follows the statutory language, demanding payment. That will start interest clock running.
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I am going to send a letter requesting a division order and also a plat showing my mineral interest. What do you mean by the mineral code?
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I apologize. I did not read thoroughly your post. I read now that your property is in Arkansas. By "the mineral code," I was referencing Louisiana's Mineral Code. I have no knowledge of Arkansas. Again, my apologies.
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Thanks for the manual and to all who have written in with advice.
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