We questioned division orders that were presented to us last year which resulted in a review and recalculation which took over 4 months to complete. We have the new orders and the revenue interests actually went down. The first was not correct and our purpose in questioning is to have the figures be accurate either plus or minus the final calculation. My question is how do we confirm that the corrected division order and the stipulation of interest is accurate now? We are in Texas and the oil company is Aruba.
Dear Ms. Dodson,
You question is totally appropriate.
At the end of the day, it is the responsibility of the landowner to know his quantum of interest in a parcel of land. In most lease forms, the mineral interest owner warrants title to the land and agrees to defend it.
Oil companies hire attorneys to review work done by landmen (which may be the weakest link in the chain at times) and render an Opinion as to the current state of title. Their opinion is only as good as the information furnished to them.
If Aruba is unwilling to furnish a copy of the Division Order Title Opinion to you (and I would not if I were them), then you are placed in a state of either blind reliance on their research, or either perform the research yourself or hire someone to do it for you. A competent landman can likely determine your ownership in a day or two, with your help as to heirship, etc…
Thank you, Mr. Cotten,for your response. I have sent a request to Aruba to provide us with a copy of the Division Order Title Opinion as well as the calculations that brought them to our total division interest. I am awaiting a response from them.
One other important factor is involved here with another well. We have already signed off on the other division orders “assuming” they were accurate. Now, everything has changed for this well. Does the oil company go back and adjust the other affected well and division orders? I’ve asked Aruba and did not receive a response, however when I inquired as to whether division orders would be corrected if they had already been paid on this second well, I received a very wrong response. I was told that no one had been paid and I am positive that someone had been paid. I provided them with the information and they changed their tune, but I had to prove it first. Hence the lack of trust.
Dear Ms. Dodson,
I have never had a situation in Texas where the company did not correct mistakes in disbursements. Make sure of the form of Division Order that you execute. Ours says that we “represent, but do not warrant the interest…”
Rita Dodson said:
Thank you, Mr. Cotten,for your response. I have sent a request to Aruba to provide us with a copy of the Division Order Title Opinion as well as the calculations that brought them to our total division interest. I am awaiting a response from them.
One other important factor is involved here with another well. We have already signed off on the other division orders “assuming” they were accurate. Now, everything has changed for this well. Does the oil company go back and adjust the other affected well and division orders? I’ve asked Aruba and did not receive a response, however when I inquired as to whether division orders would be corrected if they had already been paid on this second well, I received a very wrong response. I was told that no one had been paid and I am positive that someone had been paid. I provided them with the information and they changed their tune, but I had to prove it first. Hence the lack of trust.
I appreciate your knowledgeable response. I will give Aruba a bit of time to respond to my requests and may be back for more advice or just to update my situation. Thank you.
Dear Ms. Dodson,
I did neglect to point out that if a Stipulation of Interest is sought, there is likely a very interpretative title issue that the Operator wanted to solve in this way.
From the Operator’s standpoint, it could make a big difference on how the interest is set out, depending on the respective royalty rates and the tract participation factors. If the royalty rates on the respective leases are the same, then the Stipulation is likely prepared on how the Operator would think the parties would prevail in a suit.
I might suggest that you make a demand for payment and force the title issues. I would also advise that you seek competent legal advice rather than general business advice, if your interest in the wells is high enough to justify the expenditure.
Rita Dodson said:
I appreciate your knowledgeable response. I will give Aruba a bit of time to respond to my requests and may be back for more advice or just to update my situation. Thank you.
How does an uninformed landowner become knowledgeable enough to know that the oil company is being truthful and fair? I don’t know that our interest is high enough to justify the expenditure, especially at today’s prices. A couple of years ago a very different story. My point in trying to get this done properly is so we don’t have to wonder if we have been fairly treated.
Originally, we refused to sign the lease. We are one of seven royalty owners on our land (or so we thought) and we were told that if we didn’t sign then the other six would make decisions about what might happen on our land and we wouldn’t be able to override their decision. We now know that was incorrect, but too late to change history. Hence the caution at this stage.
Mr. Cotten,
You said," I might suggest that you make a demand for payment and force the title issues."
Can I do that without signing their stipulation of interest form?
Rita
Dear Ms. Dodson,
You certainly may do so.
Rita Dodson said:
Mr. Cotten,
You said," I might suggest that you make a demand for payment and force the title issues."
Can I do that without signing their stipulation of interest form?
Rita
Once I demand payment, is Aruba obligated to do so or can they refuse until I sign their Stipulation of Interest? Is there a correct way to do this without getting into a legal fight?
Rita