I have mineral rights in 5-18N-3W, Logan County. Devon completed a successful well, Lavera 5, and division orders were sent out in December 2013. From the same pad in the SW SW SW SW of Section 5, they completed another well, Lavera 8, servicing adjacent Section 8. I received royalty checks throughout 2014 until they abruptly stopped in January 2015. I contacted Devon and was told that field operators had made a mistake by incorrectly identifying, or switching the sign of Lavera 5 to that of Lavera 8. Consequently, I had been overpaid since my royalty payments were erroneously calculated from Lavera 8, a better producing well, than Lavera 5. Devon’s error in mislabeling the wells was not discovered until a year later, during which, all (so Devon claims) Lavera 5 owners were overpaid as Lavera 8. I own ½ MI of 160 acres, or 80 NMA, in the 640 acre spaced horizontal well, so it’s a significant portion.
Devon gave no explanation or notice to me of their egregious mistake. Devon’s solution was to suspend all further royalty payments and deduct them autonomously until the difference would be recovered. Devon decided it was also entitled to suspend and deduct all my royalties from an entirely different well they operate in a different section until losses are recouped from their mistake. Again, to my amazement, all of this took place without any notice or explanation to me as a royalty owner. This is how Devon operates and behaves with royalty owners?
Rather than to accept their cursory phone explanation, to the likes of, “Oops, we goofed!” , I requested an explanation, in writing, concerning the error from the division order analyst. After many unanswered calls, I finally got through, via registered mail, and received a very brief letter about what took place. The analyst was unable or perhaps unwilling, to provide any substantial detail about who, when, why and how this could happen. The letter:
This letter is to inform you of an error that occurred on the above well (Lavera 5). At the time the drilling rig was moved off location and completion work began the wellhead for the Lavera 8-18N-3W 1WH was connected to the Lavera 5-18N-3W 1WH. Thus, all completion data, invoicing, productions, etc. were incorrect form 7/31/13 to 7/31/14.
The error has been corrected; however, revenues for production months 7/31/13 to 7/31/14 were overpaid to you. We are now recouping the overpayments made to you. Once all the overpayment has been recouped, you will begin receiving revenue checks.
That’s it, I’m expected to accept what is purported, believe it or not. I keep in mind that price of oil was quite high at the time of completion and now the repayment of Devon’s mistake is based upon a much lower price.
And it doesn’t end there. I received no statements whatsoever, to indicate how my repayment was progressing. All statements ceased. I had to contact Devon Revenue, make demands, until I finally got a statement showing much has been repaid to date. The statement I received still does not give me a clear figure of how much has been repaid since it differs greatly from the detailed statements I once received. Furthermore, I’m sure it will be necessary to demand a statement every month from now on because Devon’s modus operandi so far doesn’t appear inclined to prioritize relations with interest owners like myself.
Are there any other owners in 5-18N-3W out there who share my experience? Does anyone know of legal counsel who specializes in the investigation of the type of matter?
Thanks--Art