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Permalink Reply by Hopeful About Natural Gas on October 21, 2012 at 16:45

I don't know your individual situation and everyone's is a bit different.

However, there have been many past threads on GHS about when your royalty checks should begin. Do a search here for the terms "royalty checks begin" (without quotes) I think the search box is just above this page of posts.

Read one of those threads and post your question there. It will bring the question to our main GHS page for everyone to comment on again.

Then, you could delete this post because the other one would have given you much more info. That way we keep a concise database of relevant info for folks like you to search rather than just a jilion short threads.

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Permalink Reply by Andrew on December 8, 2012 at 12:49

I searched for the answer to coral's question using the search function of the website and couldn't find it, so I'll add my thoughts. I'm not a lawyer, and I can only shed light on this issue in Louisiana. 

The answer I THOUGHT was correct was that royalty is payable within 9 months of first production and 3 months for all production thereafter. Further research on the subject leads me to conclude that this may be correct, but not necessarily.

In Louisiana, Royalty is considered "rent" for legal purposes. Article 123 of the Louisiana Mineral Code states in part that a "mineral lessee is obligated to make timely payment of rent according to the terms of the contract or the custom of the mining industry in question if the contract is silent." Beyond this article, I have found virtually nothing in the Mineral Code, Louisiana Civil Code, or past cases addressing what "timely payment" is. It may be there, I just haven't seen it.

So my first response is "what does the lease say?" If the lease is a standard "Bath" lease typically used in Louisiana or "Producer's 88" used in other states, the lease probably doesn't say anything on the subject. So, the "custom of the mining industry" would determine what is "timely payment."

I don't know exactly what the "custom of the industry" is on this particular subject. What I can say is that every company I've personally dealt with has sent the first royalty check within 6-9 months of the first producing month. This check would include several month's royalty combined. After that, they pay royalty monthly on a 3 month delay. The reason for the longer delay for the first check is the time it takes to perform title opinions and conduct necessary curative work.

Applying what I've experienced to your situation:

Your first production was in June. You would probably be paid some time before the end of March of the next year (9 months later). The check you receive will include the royalty owed to you from production June - December). You will then get next January's production in April, February's in May, and so on.

I hope this helps. That first 9 months painful to wait out sometimes, but take comfort in the fact that at the end of that time you will get the biggest single royalty check you are likely to ever receive on that property.

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