When we receive a monthly revenue statement from an operator with the oil sale price listed, how do we know that the operator actually sold our oil at the price listed on the revenue statement?
Are there occurrences on record where the operator sold the oil at a price higher than the price the royalty recipient received?
What guarantee or safeguards do we have that the oil price listed on the statement is the same price that both the operator and the royalty recipient receive?
Thanks for your help with this question.
No guarantees and we all rely on operator’s honesty. You would have to audit to be certain. In Texas, you can look at the gross oil sales reported to Comptroller on its CONG website and compare to the volumes and sales reported on your check detail. You can compare oil prices for the same production month between wells. Biggest problem is where operator sells at low price to its affiliate and the affiliate then resells at higher price. Mineral owner is paid on first sale. This is a reason for your oil and gas lease to specify that royalties are based on price for sale to non-affiliated purchaser. Sometimes an operator will hide cost charges by reducing the oil price by the charges, instead of revealing the gross price and deducting charges on a separate line. CONG - Cookies are required for this application.
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Thank you. I’ll review the information you provided. Unfortunately, relying on the honesty of the operator should not be considered reliable. At least two operators on our leases have lost class action lawsuits in recent years and a third operator is taking deductions on our royalties that our lawyer determined to be in violation of our lease.
As far as I know, Texas is the only state that provides public access to sales revenues and volumes reported for severance tax. Otherwise you have to see the terms of the contracts signed between the operator and purchaser.
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On the GONG website which screen do I use to lookup volume/sales information? There are 2 sections: Public Information and Secure Information. I used public information and the lease lookup but wasn’t sure which screen is used to lookup volume/sales: I tried the other links, but didn’t find the volume/sales information. I’m trying to get information on the GUAM STATE 26-21 unit - Reeves County, Texas. Thank you for your responses.
On left hand side, select Lease Drop-Crude Oil for an RRC Oil Lease ID (5 digits RRC and leading 0 in front to be 6 digits). Lease Drop-Natural Gas for RRC Gas Lease ID (6 digits) where will oil appear as CN condensate. If no assigned RRC lease id, use 6 digit Permit number. Best to include county as some id numbers overlap between RRC districts. Date range such as 2401 to 2503.
Thank you. I had tried Lease Drop - Crude Oil Inquiry previously but got no results, I tried again after your post and it worked! - Doh - go figure!
Thank you again.
Fortunately, MineralIQ does provide 12 month volume. I appreciate that Enverus has provided MineralIQ, it is a very useful site.
Be sure to look at oil disposition volume rather than production volume each month.
@TennisDaze is spot on. This is the first place I go to verify volumes and pricing for clients. Your lease may also have audit/information provisions that entitle you to review run tickets, meter readings, etc.
