We were notified that the decimal interest we are receiving payments for was incorrect and that this error goes back to late 2019. We understand the company will be correcting this mistake and assume it will include interest for the more than 5 years of late payments. Is there an Oklahoma law for what the interest rate would be? I may now have to go back and look at all leases to make sure we are being paid for the correct decimal interest and should have already done so. The lease is in Carter County.
§52-570.10. Payment of proceeds from sale of oil and gas production. :: 2014 Oklahoma Statutes :: US Codes and Statutes :: US Law :: Justia. and a new amendment to it.
D. 1. Except as otherwise provided in paragraph 2 of this subsection, where proceeds from the sale of oil or gas production or some portion of such proceeds are not paid prior to the end of the applicable time periods provided in this section, that portion not timely paid shall earn interest at the rate of twelve percent (12%) per annum to be compounded annually, calculated from the end of the month in which such production is sold until the day paid. 2. a. Where such proceeds are not paid because the title thereto is not marketable, such proceeds shall earn interest at the rate of (i) six percent (6%) per annum to be compounded annually for time periods prior to November 1, 2018, and (ii) the prime interest rate as reported in the Wall Street Journal for time periods on or after November 1, 2018, calculated from the end of the month in which such production was sold until such time as the title to such interest becomes marketable or the holder has received an acceptable affidavit of death and heirship in conformity with Section 67 of Title 16 of the Oklahoma Statutes, or as set forth in subparagraph b of this paragraph. Marketability of title shall be determined in accordance with the then current title examination standards of the Oklahoma Bar Association.
Suggest that you send a certified letter return receipt requesting the back interest-giving any reference to their correspondence that they owe it. . Not guaranteeing you will get it, but some companies respond quicker to a certified letter requesting the interest in order to avoid lawsuits.
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Most division orders ask mineral owners to verify their decimal interest, but accurately doing so requires knowing several specific details—such as the owner’s net mineral acreage, the size of the spacing unit, the royalty rate, and (in the case of horizontal wells) the participation factor. I would argue that most mineral owners don’t have all this information readily available.
This is one reason I generally advise against signing division orders that include language requiring verification of the decimal interest. If a discrepancy arises, the operator could potentially use the owner’s verification as a defense against paying statutory interest on underpayments.
Fortunately, for Oklahoma mineral owners, signing a division order is not required in order to receive payment.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
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