Royalty payments delayed - interest and penalties accrue?
BP America drills a Haynesville well in the summer of 2010. First production is March of 2012, but Division Orders don't go out until December 2012, and no royalties are paid until the end of February 2013. That's well #1. It's currently operated by Comstock.
Well #2 is drilled by the same outfit around the same time, but first production is September 2011. No Division Order is sent until March 2013, and no royalties paid to date. Chesapeake is operating the well, but BP sent the Division Order.
I'm fairly new to the game here, but it's my understanding that royalties accrue from the date of first production and are due immediately, with a 90-day grace period per Louisiana law. The law also provides for interest and penalties accruing after 90 days on unpaid royalties. I also understand that it's common for there to be a longer delay than that for the first payment of royalties to be made, after first production, but the law is the law.
If a well operator has an address for an owner within the production unit, and there is no issue with titles, aren't they liable for interest and penalties accrued on royalties not paid within 90 days of production? In the case of both wells I've described above, is there anything that would cause the owners not to be entitled to interest and penalties on the unpaid royalties and royalties paid late?
Thanks in advance for any advice or information!
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Replies to This Discussion
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Permalink Reply by Nicholas B. Couch on
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Yes, I see, thanks. RS 31:139 also addresses the question of interest accrued.
http://www.legis.state.la.us/lss/lss.asp?doc=87832
It seems safe to say, however, that given the circumstances of the two wells I've described, I'm not entitled to anything beyond the royalties owed.
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Permalink Reply by Greedy Landowner on
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Thanks for sharing this info. I'm curious about the mineral law institute. Who operates it?
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Permalink Reply by Skip Peel - Mineral Consultant on
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Permalink Reply by Greedy Landowner on
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Oh Jesus...the words "snowball's chance" come to mind
as I read the list of council members and the firms they represent.
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Permalink Reply by Connie Whyte Pender on
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My family signed the same time and only 1 sister has been receiving checks each month since February 2013. My Mother, me or my other sister had not been paid as if 5-14-13. Range #18-T16N...R13WSN241358...
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Permalink Reply by Nicholas B. Couch on
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Connie, you should notify the operator of the well in writing that you're not getting paid the royalties you're owed. That starts the process - otherwise you have no recourse.
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Permalink Reply by Andrew M. Brewer on
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Nicholas,
I'm a new member here but my family has had land and minerals producing for quite some time mostly in Cameron and Allen Parishes. We are old at this game of being royalty owners and have our own leases for oil companies to sign when they arrive with great news to drill on our lands.
Andrew is correct. Read your lease carefully to see about any delay in paying royalties.
Given there is nothing in your lease that shows a delay is permissible, what really gets their attention is to send the operator a registered letter, return receipt requested, letting them know of the law that they should respond within 30 days of the receipt of this letter or double damages will apply (Andrew can help with this part, maybe) and owe you royalties in the amount of (?) [based on the acres you have in the respective unit X your royalty percentage X what is reportedly produced by the well(s) to the DNR Sonris site with the months in question]
In our cases, these guys rake in millions, while often lowering the interest decimal on our check stubs after a year or so, pay us a different amount that is often reported to the DNR, and changing the operator name after 2 years or so keeping the same address to contact. (usually the operator change is due to lower production of the well) Keep a vigile watch for these things to happen!
Keep good records of your check statements (stubs) that reflect what they pay each month. It is crucial to have when making sure you get what they owe you.
Andrew
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Permalink Reply by Gary Hogan on
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i DO NOT KNOW WHY PEOPLE ARE SO SURPRISED THAT THE LIKES OF THESE OPERATORS ESPECIALLY cHESAPEAKE seems to be giving people run around on royalty payments. They are being sued everywhere for not paying out since they have had finacial woes. . Folks the Beverly Hillbillies syndrome is over. The royalties are pitiful atleast now. They will pay only when they owe more than $100.00 or once a year they got to because they are responsible to the IRS and State government law. BUT hey they think they got that covered. GOOD LUCK as some others have said lawsuit seems to be the only thing that moves them but it might cost you more up front than you'll recover. There maybe a few law firms looking for class action lawsuits on these matters soon. Best to ALL. Ghee where are all the Lousiana Shallionaires now ? Problems in Texas too
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