Are You Being Paid?
For many years of the Haynesville Shale Play it was common for royalty payments to begin about four months after a well was first reported complete on SONRIS. Then the delay for some wells became six months and then eight. Mineral owners begin to be concerned and to complain. Some wanted interest on the monies that they were denied and that operators were retaining for their own benefit. There is a Louisiana Mineral Code article that addresses late payment and the right to interest on delayed payments. I'll post it below. Be advised that this is a complicated legal question and one only an experienced attorney should answer based on your specific situation.
I am attaching a spreadsheet of the wells that are eight to sixteen months past their completion date and have no reported monthly production on SONRIS. Those oldest wells go back to August of 2023 and are in red under the “Completed” column. Those that will be at least eight months past their completion date are in purple starting in February. In my opinion that is disturbing and far longer than what I have seen in the past.
My question for the member is – Are you receiving payments on these wells?
Click on the link below to see the list of wells and their dates. In the Section-Township-Range column (STR), all townships are "north" and all ranges are "west".
Article 139 of the Mineral Code:
If the lessee pays the royalties due in response to the required notice, the remedy of dissolution shall be unavailable unless it be found that the original failure to pay was fraudulent. The court may award as damages double the amount of royalties due, interest on that sum from the date due, and a reasonable attorney's fee, provided the original failure to pay royalties was either fraudulent or willful and without reasonable grounds. In all other cases, such as mere oversight or neglect, damages shall be limited to interest on the royalties computed from the date due, and a reasonable attorney's fee if such interest is not paid within thirty days of written demand therefor.
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Replies to This Discussion
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Permalink Reply by full name -
The first five Comstock wells (SURR and SULL) started paying within 60 days of completion and are now refunding the severance tax.
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Permalink Reply by Skip Peel - Mineral Consultant
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Thanks for the prompt reply. Good to hear that Comstock placed those wells in pay in a timely manner. The reason that some of the wells on the list do not have monthly production reported on SONRIS is that the Department of Natural Resources/Office of Conservation has not issued the operator a LUW code for the well. That code is required for an operator to report production so without it there is no SONRIS entry.
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Permalink Reply by Skip Peel - Mineral Consultant
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I find it interesting and somewhat revealing that the five wells (SURR and SULL) have paid out and started refunding the severance tax but have no well cost form entered in SONRIS.
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Permalink Reply by full name
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FYI - First production was in 9/23 first check received was in 11/23. Started refunding tax on 7/24. They have an interesting way of refunding the tax. They just stopped collecting tax on the new wells.
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Permalink Reply by Skip Peel - Mineral Consultant
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Operators pay severance tax on each new well until they submit their well cost form, the form is reviewed and approved. Sometime after that it is entered in the database and is available for the public to see. After approval the state pays the operator back for the severance paid in and that is when the operator refunds the mineral lessors who they have been charging over that time. Then the well is back to paying severance tax again and the operator is charging their lessors, un-leased mineral owners and their working interest owners. Horizontal wells are exempted from paying severance for the first 24 months of production or until the well pays out if sooner.
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Permalink Reply by Steve P
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Skip: there is a Paluxy oil well drilled in property very near land I own. well is in 22-12N-13W, drilled by ARK-LA-TEX Energy, LLC (Shreveport)
and the last posting under well information is that the well was drilled, fracked, then shut-in. No production posted, ever. But if you drill down into the well files, there are routine pit inspections, etc. I'm assuming that the well is producing, but either no reports filed with Conservation, or somehow the production info isn't posted on the web site.
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Permalink Reply by Skip Peel - Mineral Consultant
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Steve, that well is reported as Shut in - Dry Hole Future Utility. It has never been reported complete and therefor has no LUW code number that is required to report a producing well. That status 31 can mean Ark-La-Tex may consider other uses like as a SWD injection well. Or Ark-La-Tex just doesn't want to pay to plug and abandon the well at this time. Until such time as it is P&A'ed it will get Lease Facility Inspections. And Reserve Pit inspections until the pit is closed.
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Permalink Reply by Steve P
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thanks for that info. disappointing news that it's a dry hole. I had a company (not ARK-LA-TEX) interested in drilling a Paluxy on my property a few years ago. I guess that's why they stopped calling.
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Permalink Reply by Skip Peel - Mineral Consultant
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I covered this in my main page post, How The Oil & Gas Industry Cut Regulatory Corners and Disadvantaged Haynesville Shale Mineral Owners, the State and Small Independent Oil Companies
A MISSED OPPORTUNITY. Both of those changes did not disadvantage mineral owners directly but another one did and not just for those private land owners but for the state in direct conflict with the Office of Conservation’s stated task of reducing waste and maximizing the production of mineral assets. The race to HBP all those early horizontal wells led the industry to press the state to do away with the requirement for each well to have an electric log run and filed with the state. As the Haynesville Shale fairway covered much of Northwest Louisiana that had little or no prior drilling activity especially to depths down to the Haynesville formation, the opportunity to discover and produced hydrocarbons from formations and zones shallower than the Haynesville was lost.
A BLOW TO THE INDEPENDENT OPERATORS OF NORTHWEST LOUISIANA. That lose extended to the smaller, regional O&G companies that were not capable of developing the Haynesville Shale but were experienced and capable of drilling wells in those shallower conventional formations. Those same smaller operators were also disadvantaged by the lease terms offered by Haynesville Shale operators as it was not economic for them to pay Haynesville lease prices for the shallower depths that were their primary focus. A decline in historic independent operators was an economic loss for mineral owners, small operating companies and the many workers that they employed.
This is part of the reason why most independent O&G companies no longer drill wells!
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