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Permalink Reply by Steve P on January 21, 2025 at 13:30

I should get whoever keeps these books to keep mine for my income tax returns. They would clearly pay for their costs by reducing my taxes.

Too many good ones to mention, but I do like the charge for ‘teflon tape”.

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Permalink Reply by Skip Peel - Mineral Consultant on January 21, 2025 at 13:44

Yes, humorous unless you are the one getting whipped!  I think that teflon tape may be for threaded fittings. A few insights.  Does each well have an office that needs cleaning?  I don't think so.  Likewise what pests are being treated for an individual well?  And who is making long distance calls from that well site?  And an answering service????  There is always a "field office" that is the local HQ for all the wells in the "field" but no "well office".  Begs the question, are the office expenses spread across all the wells in the field?  Enquiring minds would like to know.

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Permalink Reply by Quattro on January 21, 2025 at 14:41

I have family that inherited a mineral interest in a section with 1 well.  Never leased.  Therefore once inherited we went through the process to request the statements to see if ever reached payout which we knew it had not.  Geez…it was undecipherable and it had every expense imaginable baked in there.   I am sure once they had to start providing to us quarterly that cost was baked in there too (at 100x what it cost).

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Permalink Reply by Skip Peel - Mineral Consultant on January 21, 2025 at 14:53

In the past operators would send those indecipherable bills with code numbers instead of descriptions. Finally a court ruled that was not legal.  So operators started having to actually describe the type of expense and who was the material or service provider.  Now we can see if not always understand the types of costs passed on to mineral lessors, unleased mineral owners and working interest owners.  I guess it is a little better than being whipped with a code number.  LOL!

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Permalink Reply by Jimmy Hamiter on January 22, 2025 at 2:11

Great post, Skip. This seems emblematic of the clandestine way in which operators, um, operate. As a long-time owner myself, my wife and her brothers turned to me for advice when they inherited their own. The first thing I told them: "To an operator, an informed mineral owner is a dangerous mineral owner."

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Permalink Reply by Skip Peel - Mineral Consultant on January 22, 2025 at 2:20

Thanks, Jimmy.  I totally agree that an informed mineral owner is a danger in the eyes of O&G operators.  In fact I maintain a draft white paper of all the actions those operators have taken over the Haynesville Shale years.  I add to it from time to time as I uncover or come to understand the different ways they seek to bolster their profits at a cost to mineral lessors, UMOs and even the state.  I'll post the title below and consider posting the full paper if members are interested in reading it.

HOW THE OIL & GAS INDUSTRY CUT REGULATORY CORNERS AND DISADVANTAGED HAYNESVILLE SHALE MINERAL OWNERS, THE STATE AND SMALL INDEPENDENT OIL COMPANIES

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Permalink Reply by Jimmy Hamiter on January 22, 2025 at 3:54

That's awesome to know. One last side note. In '07, my dad discovered BP was holding back royalties for many years to the tune of $30k, which they promptly sent him once they were called out. I became a skeptic before actually becoming an owner! 

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Permalink Reply by Skip Peel - Mineral Consultant on January 22, 2025 at 4:06

I've never known a Haynesville operator to correct an error costing a mineral lessor or unleased mineral owner (UMO) that they discovered.  The statute of limitations for recovery of unpaid royalty is three years in most cases.  Since HA wells are front loaded and produce 75 to 80% of their lifetime volume in the first thirty or so months, operators legal obligation to pay back royalty is limited unless notification and demand are made soon after wells are completed.  Waiting past three years to demand payment will recover little in the way of the revenue produced by HA wells.

BP and other operators often make internal mistakes such as an incorrect mailing address, other contact information or misplaced tax information.  Mineral owners beware - you have to look out for your own interests because the O&G operators will not.

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Permalink Reply by Jimmy Hamiter on January 22, 2025 at 4:55

Just for clarification (however that matters), this concerned 9 non-HA wells. Good advice either way.

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Permalink Reply by Christopher Combs on January 22, 2025 at 4:53

Skip, I think that would be great for members to take a look at. I work at a family office that owns and acquires minerals. We manage over 200 NMA's of unleased mineral interests in NW LA. We don't keep a "running list" of ways that we get pencil whipped, it's more of a shared knowledge our group has developed over the last 7 years of managing Haynesville assets. I would love to take a look at what you have compiled and see if I could add anything to it. 

Also FYI, the statue for improper payments on lease royalty is 3 years, but for UMI payments it's 10. 

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Permalink Reply by Skip Peel - Mineral Consultant on January 22, 2025 at 5:36

Thanks for the clarifications on UMI non-payment, Christopher.  That's a lot of unleased mineral acres.  I'm not sure if my white paper will help but I think it is a cautionary reminder for all mineral owners when it comes to dealing with O&G operators.  I'll post it in a separate main page discussion and look to get feedback. 

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