How Long Till Royalty Checks Begin?


#1

I was just informed a permit to drill was approved 06/21/2018.approximately how long does it take for royalty checks to begin showing up?


#2

Hey George,
Congrats, sometimes it takes them months to drill, not always, I had my third one approved 4/10, the started last week, takes 30/60 days to drill a well most times, then completion reports then all the division orders go out, once everyone has those done all this, the checks will start to come, so short answer, 4/6 months at least


#3

In Oklahoma you are looking at about 5-6 months from date of first sale until you get the first royalty payment. On our latest well it was 5 months. If they don’t start paying within 6 months the company has to start paying you interest. As Willard said it can take 1-2 months to drill and it’s difficult to say how soon the company will drill after they get the permit. Keep an eye on completion and permit reports.


#4

If you are in OK and they are drilling a multi-section horizontal well, it can take up to five months to drill and complete. Then roughly six months after first sales before you get paid.


#5

Am I correct to assume that the 6 months of production for instance is the company getting their drilling costs back?


#6

Not necessarily. Sometimes it takes years to get their drilling costs back.
The six months is statutory. They can pay sooner. They just have to pay you six months after first sales. It takes months to get the title opinion done on hundreds of owners in a section to make sure they pay everyone correctly.


#7

So, however long it takes to get your first check, it will represent sale of the first barrel of oil from the well?


#8

Its been almost a year still no checks


#9

Some operators have a history of delaying the start of paying royalty owners while others are prompt. I have seen an operator which did not want to pay any royalty owner until the title issue for one or two small owners were settled. There was no issue as to the ownership and decimal interest of any other royalty owners but only a title break for a couple small interests. The operator said it was all in pay or none in pay. It is a good idea to put a clause in your lease requiring first payment with 90 days of first sales and 30 for oil and 60 days for gas thereafter and to specify the interest rate due on any late payments. Then there is no question as to what additional payments are due to you for the delay.


#10

This is a good tip in the post just above. Thanks @TennisDaze :grinning:


#11

Can you help me with my lease