landowner

Does Mineral Code provide for legal interest to be paid for admitted, multiple year underpayment of royalties?

I am the lessee of an Oil & Gas lease which my deceased father  sub-leased many years ago.  The Sub-lease called for a Before Payout ORRI on a well by well basis of approximately 1 3/8 % which has been payed for many years on 3 wells.  In addition,  the Sub-lease called for an After Payout ORRI of 2X the BPO rate, or approximately 2.75%.  I discovered a couple months ago, that though the wells had paid out, the Operator had never changed the ORRI rate.  I sent a demand letter to the Operator, pointing out the terms of the Sub-Lease and demanding an accounting for the 3 wells.  I promptly got a phone call wherein the Operator admitted their mistake and promised to correct it.  I have a meeting scheduled tor tomorrow afternoon at which the Operator will show me its findings of underpayment  amount and the calculations. The wells are not very prolific, and I do not expect it to be a huge number.  Here is my question:  Does the Mineral Code provide for the payment of interest when there has been an underpayment of royalty through the fault of the Operator??? Since this has been going on for a number of years, without an interest payment, they would be paying me with very discounted dollars.  I do not want to ask for the payment of interest if it would be unreasonable, but otherwise I think it would be appropriate.  What is the current legal interest in Louisiana?

Views: 99

▶ Reply to This

Replies to This Discussion


Oil & Gas ProPermalink Reply by SOLAOGA on June 6, 2011 at 12:21

Search for Louisiana judicial interest calculator

 


Oil & Gas ProPermalink Reply by The_Baron on June 10, 2011 at 4:59

 12 million dollar cost of a well, paying $4.00 for gas will pay out in four months. 

 

Ya Right, try again. I/my company am involved in several CHK HA wells. We are looking at about a 3-4 year payout, if we are lucky. One well has already declined 93% after 17 months, and still dropping.


landownerPermalink Reply by Hale Yayuh on June 10, 2011 at 5:17

rule of thumb or something like it:

a 12 million dollar cost of a well, paying $4.00 for gas will pay out in four months.

 

Roy, it's posts like your that harm people and I'm calling you on it. That is utterly ridiculous. I know what you just said is utter b.s. cuz I have looked at the wells just like you can do, and 99% of all wells are not anything close to that good.


landownerPermalink Reply by Spring Branch,mineral owner on June 10, 2011 at 5:25
Roy, I'm going to call you out on your post as well.  In the first place it had absolutely nothing to do with the topic of my initial post.  In the second place it is so inaccurate as to be laughable.  Are you intentionally trying to deceive?

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on June 10, 2011 at 5:59

It is often difficult for laymen members to ascertain whether a member posting a comment is, or is not, an "expert".  That's why Keith has a disclaimer.  Partial excerpt:

 

3) Site administrators do NOT confirm the validity of any post. Please remember that we do not actively monitor the posted messages and are not responsible for the content posted.

 

4) We do not warrant the accuracy, completeness, or usefulness of any information posted. The posted messages express the views of the poster, and not the views of this GHS staff.

 

In this case the members objecting to the accuracy of the statement, "a 12 million dollar cost of a well, paying $4.00 for gas will pay out in four months" are correct IMO and do a service to all the members by pointing out that it is not accurate and should not be used in making any decisions in the management of minerals.

 

In fairness to Mr. Smith I would also point out that some discussions in 2008 reported wells paying out in four months however those examples were wells with far greater than the average Haynesville Shale well production and that the price of natural gas at the time was three or more times what it is today.  Caution should be applied when reading archived discussions or discussion threads that may reach back over three years.  It is helpful to note the date on the posted comment.

RSS

© 2026   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service