32-18N-08W - Royalties not being paid

I am a royalty owner in the Johnny 32-1H well in Kingfisher County, 32-18N-8W.

The first sale was April 5, 2017. It is my understanding that the first check was to be paid within 6 months of the first sale. My brother has left 5 messages with the person at Gastar “handling the payments”. They have not returned any calls. I called and convinced the operator to put me through directly. The lady said she was working on the paperwork and should have the division orders done in the next week or two. She then said the 6 month thing was just a guideline. Sounds awfully fishy to me.

What is the law and how should we proceed?

Is Gastar financially sound?

Thanks for your help

Rick

According to what I've been told and read about Oklahoma law, the first payment must be made in 6 months from the first sale (of minerals) OR the company has to start paying interest from that time until they make payment. I have a similar situation with Linn Energy. We theoretically should receive first payment by the middle of next month and I have questions about our leases but in spite of sending emails and calling haven't been able to get the person responsible for leases, they don't return calls, frustrating!

Very frustrating! I have had issues with my own interests also.

I do not know of anyone (Im sure someone is out there), that did not get paid if they had clear title. The money is being held in suspense and is not going away. Oil co is getting its ducks in a row, sometimes with limited staff. Maybe there is a title issue on someone else's interest that would impact the total interest and therefore your interest. Key staff took a vacation, attorney is questioning documents. Oil and or gas purchaser is holding up paperwork... In the past I have worked for an oil company and was difficult to hear an upset owner screaming at a division order analyst about an issue that they have no control over.

It is their fault and not what you want to hear but these things happen. Your money is still there, you will still get it. There are others on this site that can talk directly about the interest etc.

I would suggest you check out the National Association of Royalty Owners (NARO) http://www.naro-us.org. Good source for information.

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The six months is statutory and you will get your money if your title is clear. There is sometimes a slight fuzzy time zone in that you get paid six months after the first month of sales, so that could move you into November of 2017. If you do not get anything by the November pay date, then you can send them a nice certified letter and remind them of their statutory responsibility. I have gotten some nice interest checks a year late in the past. The date sometimes depends upon the check dates of the individual company. If you miss the cycle date of the month when they cut the checks, then it can roll to the next month. I would remind them that the payment was due in October and they owe you one month at 12% interest. Here is the reference so you can quote it to them. It is NOT a guideline. It is better to ask nicely the first time via a certified letter so you have proof of mailing.

https://law.justia.com/codes/oklahoma/2014/title-52/section-52-570.10/

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Is the Completion date the same as first sale date? If not, how does one find the sale date?

No it is not. But it will say on the 1002A.

Completion first, then comes production. Depending on the reservoir and completion type, first sales could be the next day or in two weeks. It won't be two months, but it usually isn't the next day either. In most cases these days, I would expect first gas sales within a week, and first oil within the first 21 days after completion.

For comparison, I just completed my first HZ Woodford well in Canadian County and first gas sales were about 8 days after completion ENDED (probably 16 days after completion BEGAN), but we still haven't seen first oil sales yet. Any day now...

The caveat to that is if several wells are being drilled from the same pad. Sometimes, they will wait until all the wells are drilled and then hook them up for sales after the last one is finished. Could be months later.

Go to the OK tax site and look for the “active date”. That is usually quite close to the first sales date.
https://otcportal.tax.ok.gov/gpx/gp_PublicSearchPUNbyLegal.php