I have minerals in Midland and Glasscock county TX that have had existing vertical well production for years. Operator just recently completed several horizontal wells and began reporting production starting December 2022. This mineral estate was an inheritance so I had not verified the decimal interest on the old vertical wells, but decided to make sure everything checked out on the new division orders. The title is very straight forward and I found a small discrepancy on the decimal interest being reported to me. I reached out to operator and explained the discrepancy over email (They are impossible to reach via phone). The division order analyst let me know that the new wells were setup based on the old vertical wells so they would need to rerun title and have a 3rd party broker also verify everything. It has been months and they will not give an update as to when I can expect this to be corrected and new division orders sent. They just keep telling me it is going to take some time. Meanwhile, all of the interest is being held in suspense and this is a very significant sum of money. It feels like the operator is dragging their feet. Does anyone have advice/ideas on ways I can encourage them to hurry this process along as playing nice is apparently not getting me anywhere? Also, can I force the operator to pay interest on these funds being held up in suspense? I have checked the title myself and it is relatively straight forward (I have years of experience running title and purchasing/selling mineral rights in Texas). I understand this is a process, but seems the operator should have done this work before drilling these wells.
The DOTO would have been based on the original vertical well data being correct as no one had challenged it over the years. So the operator will need to have new title run and they may or may not agree with your calculations. At the same time, any increase (change) to your DOI will cause adjustments for other mineral owners and the entire deck will need to be revised, depending on all the owners affected in this chain. There is no way the operator will pay you more and not apply all the other changes (reductions and increases) at the same time. A lot of oil companies are way behind in issuing the first round of division orders. Overall from the oil company viewpoint, this is minor matter. You might try asking to sign a division order with the original DOI with an added statement that you are not agreeing that the number is correct, but that it is the minimum you are due. Then at least you will be in pay for most of the royalties. This proposal might be more successful if it comes from your oil and gas attorney. That will still leave you with questions of eventual timing of any correction, but your attorney may get an answer on that.
Thank you for your reply and insight. That is where my head was at and planning to have my attorney write letter, but thought I might see if anybody had ideas I hadn’t thought of. Sounds like I’m on the right course. I did read that in the Texas natural resource code sec 91.402 and 91.403 that barring a title discrepancy, you are entitled to interest on payments not made 120 days after end of month after first sale at “two percentage points above the percentage rate charged on loans to depository institutions by the New York Federal Reserve Bank”, I don’t think we even received first round DO by this date. While I agree it is probably minor issue from operators perspective, on the suspended amount and at this annualized rate we are talking thousands of dollars per month interest. While this is still probably peanuts for them, I’m wondering if anyone has had luck getting operators to actually pay interest in this type of situation? Seems like being forced to pay interest might give them some incentive to get this resolved.
Be very careful about what Law Firm you hire! Local area attorneys are more prone to be compromised by the big companies. Sometimes the “threats” to take them to court will get them moving and pay you. Certified Letters, return receipts requested are a must! Prayers for you and everyone else.
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