Replies to This Discussion

Permalink Reply by adubu on December 28, 2012 at 1:11

Lee White--- I assume you are talking about execution of lease. You are paid royalties once you sign DO (Division Orders)on a well if it was spud prior to expiration date of lease and now the leased minerals will be HBP as long as well is producting plus any other additional  wells that are drill in your unit. You will be paid royalties on all production from time well production to sells start. If you were in a ULMO ( Unleased mineral owner) when they spud well and now you have signed a lease after well was drilled then you have a different situation and may depend on what terms you agreed on at time of leasing.  

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Permalink Reply by Lee White on December 28, 2012 at 1:24

As I stated, the lease says the effective date was months before the execution date. The well has been producing and gas has been sold for many months now.

Before even signing the lease they had taken and sold gas. So I guess I should be paid back to the effective date of the lease.

The terms on signing was that the effective date would be a year before the execution date.

In an e-mail they said I should have the division order in January and get back pay. The wells were producing and selling about 5 months longer than they say the will back-pay me.

 

 

 

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Permalink Reply by adubu on December 28, 2012 at 3:17

When was well spud and when did you agree to the lease you signed?

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Permalink Reply by Lee White on December 29, 2012 at 2:14

I am going to wait until I get the DO which they said I should get in January and then send that and the contract to an attorney to look over.

I found this on a legal blog in Texas:

"The execution date is the date that the party signs the document. The effective date is the date that the agreement becomes effective and can be a specified date other than the date the agreement was signed. If no other date is specified, the contract is effective on the execution (signing) date."

I got copies of the papers filed after I signed the contract and they all show the lease date and not the execution date used in the filing.

So I think the effective date is the date from which they will have to pay me. It has also been well over 120 days since I signed the lease and they have been selling the gas so I am not sure if they will owe me interest since both wells they drilled have been producing over 120 days.

I sent a certified letter to the company after I could not get return phone calls after 120 days demanding answers. I sent several e-mails also.

RRC states:

ROYALTY OWNER REQUESTS   Section 91.404(b)

If a royalty owner notifies you in writing of failure to make timely payment,   you must either make payment or respond in writing within 30 days of receipt of the notice.

After I sent this letter I received an e-mail telling me they will be sending the DO in January and pay me back pay to the date we signed the contract. I e-mailed them back and told them that the effective date is before the executed date on the contract and I have not heard anything else from them. So maybe they are looking the contact over again. I stated what the contact said word for word when I responded to them by e-mail. Now I am waiting for a response to the certified letter I sent with return reciept.

I had contacted two different law firms that deal in oil and gas contracts and both said I should send a certified letter since they would not reply to me. That is why I ended up sending the certified letter. From now on I will send certified letters if I have any questions with the oil company.

I have also faxed both firms copies of my contract.

As far as interest the RRC states:

Late payment interest is due at a rate of 2 percentage points above rate charged   on loans to depository institutions by New York Federal Reserve Bank when:

• Payment is late and the title is clear
• Payment is late, a division order is offered that does not comply with       statutes, and the division order is not signed

Late payment Interest is due at a rate of 4 percentage points above the rate  charged  on loans to depository institutions by the New York Federal Reserve  Bank when:

• Payment is late and notice that you are the new payor has not been provided

So for now I just wait.

 

Thanks for all the responses. I was hoping maybe someone else had dealt with something like this.

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Permalink Reply by adubu on December 29, 2012 at 11:05

Lee--- please clarify since you said "contract" question did you lease your mineral as Lessor to operator Lessee in a standard type lease agreement normally done my most mineral owners? Was leased signed before well spud or was well already drilled before you had knowledge of the well, because you did not agree to lease offered before drilled or they just recently found you as owner of minerals in unit? The division order is document used that says mineral Title has been cured and you signing confirms you agree to decimal interest of your minerals and does not change any agreements in the original lease you agreed to and sign with lessee -- if you have some type contract you sign after well spud and you were not leased then i recommend you consult oil&gas Attorney---who is operator and what is well name and location-- how many acres net minerals you have?

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Permalink Reply by Lee White on December 29, 2012 at 21:02

The lease agreement is a contract.

I am going to wait and see what my attorney says. He works for a large firm.

I know what the DO is and what it should have in it according to the RRC.

I am not going to discuss any more about this since I will be having an attorney handle everything for me.

If you search the web there are many different "standard" leases out there.

Mine, however, has the effective date as being earlier than the execution date.

 

 

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Permalink Reply by adubu on December 30, 2012 at 11:42

Lee White--- If you have attorney knowledgeable in Texas Oil & Gas then Please follow his advise !!!!! and not what you find or read on any online blog inculding this site-That what you are paying him for and if you are not happy with his answers then find another attorney to handle your case for I am not attorney but have some knowledge and simply was trying to help point you in correct direction- I understand that most leases will have effective date different from date signed since most are agreed to verbally before final lease papers are send to you.I do not care to know about your personal business. I simply was attempting to be helpful since YOU posted the question on this site--- I wish you well and that you get the issue settled to your satisfaction--- wish you Happy New Year and sorry you took my attempt to be helpful replies wrong-----------------in general you should receive all royalty due you from first sell of oil&gas produced--- sometimes operator is delayed curing you Title befored first payment for you money simply sets in escrow until all cleared it could be year are more-- if they said DO coming to you after 1St Jan you should get your money soon

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Permalink Reply by Lee White on December 30, 2012 at 21:45

I only asked in the original question about the effective date versus the executed date regarding the wording in my contract. In the meantime I found out the effective date is valid for all payments.

Since my attorney at the firm is on vacation over the holidays I thought I would post here and get an answer since so many people here have a wealth of knowledge about the oil and gas industry.

The person that e-mailed me from the oil and gas company over the holidays said they were going to send the DO in January and pay me back to the date I signed the lease contract (executed date). I reminded the person that the actual effective date of the contract was months prior to that and then all e-mails ceased.

However, I did send a demand letter with everything necessary to them and I got the green signature card back already. I gave them 30 days to get everything done and pay me in accordance with what the RRC states. That would also include interest.

I have called them for months and never got return phone calls. I also e-mailed them many times without a response. I guess the way I worded the last e-mail it made enough of an impression that they responded.

I just don't want to go into more detail on an open forum until I talk to my attorney again.

When I get the DO I will have my attorney look it over and compare it to the lease contract. If all is good I will accept it.

Adubu I am learning as I go along. I have spent many hours reading over the Texas laws and taking in what is on the RRC website.

My two college degrees are in accounting and medical technology. I have never dealt in oil and gas. I am now retired so I have time to look things up.

Adubu you responded the best you can and I really do appreciate that.

Have a Happy New Year and a prosperous New Year.

 

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Permalink Reply by Two Dogs, Pirate on December 31, 2012 at 4:42

Lee, the effective date is the date you go by.

Permalink Reply by adubu on December 31, 2012 at 15:15

Lee-- two dogs reply simply and to the point. What confused me about your question you mention "both wells" which let me to believe there was a well drilled prior to the one in question prior to you signing a lease ( "Contact"). If that was the case then that complicates the issue and you would have been a ULMO for first well. Now it sounds like "both wells" drilled after effective date of lease if so this simple issue will be resoved  when you receive the DO and your attorney reviews with approval for you to sign. Enjoy the mailbox income and Happy New Year---