Found this on the internet:
Permian Resources to Kinetik Holdings Inc.: Permian Resources sold its oil and gas gathering systems in Reeves County for $180 million in cash, subject to “customary post-closing adjustments”.
Why are royalty owners liable for “customary post-closing adjustments”?
You royalty payments are based on the production from the wells where you have that royalty interest.
If production for those wells was inaccurately recorded and you were paid on that total, you will see the adjustments that fall in line with the revised production numbers.
These adjustments swing both ways - either a positive or negative adjustment can occur
Repsol just deducted so many “recoupments” in my Nov 2025 statement that I ended up with zero revenue. Statute of limitations? Aren’t there limits on deductions? I’m in McMullen County, Texas on the Eagle Ford Shale.
Thx for input!
Mineral owners are subject to a 4-year limitation to asset underpaid or unpaid royalties. Oil company are not subject to this timing in correcting royalty payments by prior period adjustments (PPA). Sometimes the adjustments can exceed current income and you will not receive royalties until the overpayment is collected out of current royalties. Look to see if your check detail shows a negative account balance to estimate how soon you will be paid.
Good post by Tennis Daze on royalty issues.
If the deductions are tied to production related factors (e.g. compression, transmission, marketing, etc.) and you don’t have a “cost free” lease, there is no limit on how long these deductions can be made against your monthly revenue stream
I got wells by inheritance and I didn’t have a lease when I got it. Still haven’t got a lease. But I did get an attorney to find out why our wells three of them went down the tubes on royalties from $2,000 to none or up to $300. My two brothers have the same properties and same percentage that we split three ways equally and we always got the same amount of royalties checks then Permian Petroleum took over and one of my brothers hadn’t been paid for the last three months and my other brother didn’t get checks for four months while they were figuring out the transfer of land. Now we got Commingle to deal with. I’m hoping to get good advice from lawyer and here. I may have gotten off subject but my royalties are wrong and need fixing. I’m wondering if they consider my wells as older wells because they are only two years producing and those two years had been consistent in payout?
I don’t know what lawyers will be able to tell you about the wells and their performance as to why revenues are down / reduced.
Step one is doing the research (or having someone do this for you who understands O&G in Permian Basin) as to these wells, their history, production over time, etc.
All this info is available in the Tx RRC (free site).
Can you share the details of the three wells? Operator? Well / Lease name? etc.
All this should be on your monthly revenue statements
Your brothers may have changed the minimum amount on their Division Order. The draft usually comes at $100, but you can change it to $25 to get more regular checks.
If you give the wells, we can help with the production or you can look it up on the RRC. Horizontal wells decline rapidly in the first few years. Oil prices have also dropped in the last two years. Gas prices may be burdened by takeaway capacity so some areas are negative.
Permian Petroleum Reeves Co
OIL& GAS
Legal Description
Young 270-271 A81H(API 4238939323 Covering the Western Most- 480.89 Acres of Sections 270& 271, Block 13,H&GN RR CO SURVEY REEVES CO. TEXAS ( 270-271 WEST UNIT)
Legal Description
YOUNG 270- 271 82H (API 42389324) COVERING THE CENRAL MOST 320.56 ACRES OF SECTIONS 270-271,BLOCK 13 H&GN RR CO SURVEY REEVES CO TX
Legal Description
YOUNG 13-0-270-271 D 11H (API 42389316) COVERING THE MOST 480.89 ACRES OF SECTION 270-271 , BLOCK 13 H&GN RR CO SURVEY REEVES CO TX (YOUNG 270-271 WEST UNIT)
COPIED OXY TRANSFER ORDER BUT NOW PERMIAN SINCE JANUARY OF 2025
These wells are two years old. My mother got this land from divorcing my Dad back in 1970 the last 10 years of her life she lived with my oldest brother. She had dementia. It was two years after she died that Oxy got a hold of me telling me to ask me if I knew a Wilma K Berry? I said yes that’s my mother.Then said she had land with oil production on it for the last two years and it was in a suspense account. My mother never mentioned having this land, I think she forgot she had it. She had past about the same time they called me.I don’t know why it took them so long. Me and my brothers have no experience with this oil business at all but anyways this is what we have.
Retain an Oil and Gas Atty. Looks like you have something very lucrative there sir.
I don’t have a lease with Permian, and I was told we were on a working lease agreement or something similar. I thought royalties was after the cost that they incurred on maintaining the well. When we got the money from the suspense account for two years we ended up paying close to $10,000 taken out of the royalty check each of us so that’s $30,000. Seems like a lot to me but what do I know, nothing really it’s trusting their doing it right. So I’d like a little info on that too. What’s the norm on leases anyway?
My older brother did hire a oil and gas attorney that has 26 years in the business. We gave him permission to get into all the records that they have about the wells. Hopefully find out why we get different amounts since they took over operations from the three of us divided by Probate three equal amount of land and percentage to the three of us. I would like to know when they are going to start commingling the wells.
Iam not sure because the lease amounts vary. But a good oil and gas attorney will definitely get to the bottom of everything for you. They ll cost a pretty penny but they are beyond worthed. I had 5.1 acres in Reeves County and sold it to an oil and gas company. They originally gave me a low-ball offer but I hired an attorney and negotiated a very good deal. Sounds like you have a good one on your team! 26 years experience is awesome! Best of luck to you!
If you are an unleased mineral owner, then you are treated as a working interest in the wells - sort of like being both the lessor and the lessee. Suppose you own 2% of the minerals in the well and had a 25% royalty. Normally your lessee would pay 2% of drilling and operating costs and you would receive 0.02 X 0.25 = 0.005 of the revenues. The lessee would keep the other 1.5% (0.015) of the revenues and pay all related well costs. Here you are an unleased mineral owner. On a well-by-well basis, the operator pays all the drilling and operating costs and is entitled to recoup your unpaid 2% of all costs against the 2% of revenues until operator is fully repaid. This is called pay-out, where all costs to date have been recouped from oil and gas sales of the well. You are still an unleased mineral owner, but now you get 2% of the revenues LESS 2% of all ongoing well costs. This can be set up as (1) you are paid the full 2% of monthly revenues and you separately send a check for the 2% of monthly costs OR (2) you are paid the 2% of revenues and the 2% of costs are deducted out of the check payment. The wells you listed were completed around June 2021 and are four years old. Maybe the referenced payout was two years ago. Be aware that you will be reporting this working interest income on Schedule C, as earned income. Your CPA can advise you on this.