Gary L. Hutchinson said:
Linda,
Much of the production decline in recent months is the residual effects of the floods last year. Some mountain roads are still not completed. Some production planning and execution came as a result of a large land swap between major operators. If your payee didn’t change, you may not have been affected by the swap. In some areas I’m familiar with, pipeline construction has caused wells to be shut in. In the larger picture, production will continue to expand over time as more portions of the basin continue exploitation through horizontal and directional drilling and with completion technology advancement. Fracking restrictions and public concerns with fracking in some political areas may delay production of minerals.
Your family has been leasing for a long time in the area and some of your newer wells may have been drilled on land held by production (HBP). I doubt that the old leases with lower royalties have a unilateral deduct clause in them so check them out and notify the appropriate payee of the mistake. If you were asked to sign a new lease with a higher royalty and onerous additions concerning marketing costs then signed a Division Order supporting the new lease, Whoops.
At any rate, with lots of land and wells in the Niobrara System, you are in for a good, long ride depending on, as always, locations. In fact you may realize considerable opportunities ahead depending on your lifestyle desires.
Gary L Hutchinson
Minerals Management
Gary,
We haven’t done any new division orders in this time frame. The transportation deducts just seemed to appear suddenly, and they are substantial. In fact, adding up that, the new state withholding deductions, severance and production taxes, and this mysterious (X) “other deductions”, means we are losing approximately 30-40% of our royalty income. Not small bananas!
Do you have any info on what the (X) other deductions are? Is it legal for them to just randomly deduct without explanation as to what it is for?
Also, on the state tax withholding, which is also a recent phenomenon, our 1099s do not reflect the withholding so we are not able to claim it as taxes paid. Seems a bit fishy to me…
We were told by Anadarko that we only had 6 wells that were affected by the floods, out of many many that we own. They also said that the December check should have been the only one to dip. My main concern is the substantial drop over all of 2013, in comparison to the boom years we had in 2010/2011. Have any ideas?