Is there an authority over an oil company?

Our oil company will not pay our royalty. They have held it in suspension since 2013. They've told us that everyone in our group will have to sue them for the money. That is what we are currently doing. Is there an authority over the oil company to report this to?

Hi Beverly -

I Dunno. Maybe the SEC?

What company is it?

Why do they say they aren't paying royalties and you have to sue them?

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

The oil company is Diamondback Energy. Bluestem began drilling and they put the money in suspense. It sold to Rio and then Diamondback.

One of the royalty owners questioned the interest and Bluestem stopped the royalty for everyone in that group. The attorney that questioned the interest proved that the interest needed correcting. Diamondback did not acknowledge any correspondence from our group until they took them to court. Diamondback settled and paid 90% of the interest. Diamondback said they would not release any money to anyone until they met them in court. So, every individual has to sue them for our money! And then we may never get all of our money. Actually, they would be stealing it, if they don't pay us all of our money.

I've contacted the Railroad Commission. They don't offer any help. Isn't Diamondback responsible to someone?

We would need to know a whole lot more about why Diamondback is refusing to release your royalties to offer you any kind of valid advice.

But I can suggest that your group all use the same Attorney to keep the costs down. If you would like to discuss your situation(s) with one, accept my invitation to become A Friend on The Forum and I can send you contact information for a few.

What State is the interest in?

The Railroad Commission does not enforce payment of funds due. You have to sue. I wish you luck. If the disputed ownership does not affect your royalties, then they should be paying you. Read your original lease. There may be an answer there.

For what it is worth, their NASDAQ symbol is FANG. There is something Freudian there. Let us all remember that these are people that we will not do business with in the future. We have been warned.

Dear Ms. Mills,

An oil and gas lease is both a sale of minerals and a contract. Unless modified, the payment of royalties is an obligation of the Lessee. That is akin to a promise. If they break their promise, then you have to sue for specific performance (pay the royalty). Sadly, they can pay you the back royalty and then hold the royalty again.

One solution -- the one favored by most oil and gas professionals representing landowners -- is to make the payment of royalties a condition of lease. That means if the condition (payment of royalty) is not met, then the lease ipso facto (by the fact itself) terminates for non-payment of royalty. Then there is no lease and they, in theory, could be evicted. Bad news for them.

The moral to the story is to address these potential situations before they arise, in the lease form itself. It is tough to get an education this way. It is a very expensive education.

Not being a lawyer, this at first blush appears to be a civil matter. But some federal lawyer might make, or try to make, the case that this is an ongoing criminal enterprise crossing state lines and is subject to the RICO act. That would scare any oil company executive.


Buddy Cotten

Thanks. I am going to ask our attorney about the RICO act.

That is not good news..........