I and my sisters own mineral rights in Woods County, Oklahoma, but we live in Nebraska and we sold our surface land. We renewed a lease with Chesapeake in 2008 for 3 years. Upon investigating whether or not our lease would again be renewed we discovered that a horizontal well had been established which reached under our section (24, Township 28N, Range 18W).
Apparently, although production began in late 2008 we were never notified or sent a division order. First, Chesapeake denied we even had a lease with them. Then they claimed that they had not sent us a division order because they didn't have our addresses!!
Now, they say they will send us one, but won't give us any information regarding the extent of what natural gas has been retrieved or how much we are owed until we sign the order. I believe that the well is called Beehive and the entry well is actually in section 13 (north of our section 24).
Thus, my questions....
Does anyone know anything about this well, how it is producing, how many parties are involved etc.
Has anyone heard of this type of thing happening before..are we entitled to interest on the monies we should have already received?
Any suggestions on where we can go to find out such info?
I would advise that you discuss the matter with an Oklahoma Oil and Gas Attorney as soon as possible and before signing anything.
Depending upon the amount of your mineral interest and royalty income, there may be a point of diminishing return on what an Attorney might cost, but I would definitely suggest tht you talk it over with one.
Production information should be available through the State's Oil and Gas regulatory agency - I believe it is under the jurisdiction of the Corporation Commission in Oklahoma.
Your Royalty Division Order will reflect the decimal interest of your mineral interest in the Pool or Unit, subject to your lease.
As far as the other parties involved, they would all be listed in the Company's Royalty Divison Order records, but I doubt they would share that with you.
The best you might be able to do is obtain a copy of the Pooling Agreement, which would be filed with the County or a copy of the Unitization Order, which would be filed with the State.
If you hire an attorney, get a good mineral owner attorney if possible. So the well is producing from the land where your mineral interest is located. If there are no title issues to justify suspending your interest/revenue in production and they had valid addresses on you, you should be able to recoup the oklahoma statutory interest rate of 13 pc per annum compounded monthly. Used to charge companies under this statute frequently when statute was not widely known. Check statute for changes. I’ve not looked in sometime. I just request rate mandated under the Oklahoma statute. The question is what more is an attorney going to get you on this? Will you come out with a good net profit? if you are sure that your lease was valid at time production was obtained, I myself would sign DO, request okla’s statutory interest and take my money to the bank. Mistakes do happen. If they commenced to drill and obtained production on your unleased mineral interest, hire a mineral landman or attorney after getting atleast 4 duplicate recommendations. Makes me somewhat suspicious that they will not talk to you without a signed DO, but maybe that is standard practice. Doesn’t seem right. 9186257355. Stephanie.wilbanks@yahoo.com. Interesting case.
Thank you so much for your helpful responses. There should be no question about the validity of our lease, we had an attorney review it, as well as the previous one. We also had an attorney review everything when we sold the surface land a few years ago...he was looking specificially at making sure there would not be any problems with our retention of mineral rights given our lease with Chesapeake. At the time of the surface sale title was clear... it has been in our family for over 100 years so they would have to be VERY creative to challenge our clear title rights.
Given that we have had two leases with Chesapeake, both of which required correspondence, which came to all of our addresses, and the fact that in order to receive our lease "bonus" we had to provide them with our social security numbers, and our surface land sale would be on record in Woods County, along with our full names and locations, I can find no excuse or rationale for claiming that they didn't have our addresses. (Have they heard of google???) I think that that was just a lame thought-up-on the spur of the moment attempted excuse to explain why what should have happened didn't. Also, I still can't believe that there isn't some sort of legal regulation that requires them to at least make a minimal effort to find the addresses if their own record keeping has been deficient.
More likely, I can see how with such a large organization that we somehow just fell through the cracks.... However, when the division orders and / or pooling took place, how they could have missed accounting for all legally relevant mineral rights owners in the area is a pretty bad oversight.
I'm convinced we should consult an attorney...they are worth the money compared to attempting to figure things out on our ownwhich could easily take up days and days and still not be sure what we find is current etc. I'm with you Stephanie, I think a lot of things about this are suspicious or at least demonstrates incompetence. However, some of my other sisters are more trusting and forgiving of potentially "honest" mistakes and think we should just let Chesapeake fix things now and do what they tell us to.
I was hoping to at least be able to do some preliminary discovery for amount of gas production and calulate how much money we are talking about. Obviously if it is more than trivial it is worth paying an attorney. If it is close to nothing we'd probably be better of just signing the DO. I have not been able to get the computer access program to the gas production reports to work, but maybe I'll just try to call the commission as Charles has suggested.
Thank you so much for your helpful responses. There should be no question about the validity of our lease, we had an attorney review it, as well as the previous one. We also had an attorney review everything when we sold the surface land a few years ago...he was looking specificially at making sure there would not be any problems with our retention of mineral rights given our lease with Chesapeake. At the time of the surface sale title was clear... it has been in our family for over 100 years so they would have to be VERY creative to challenge our clear title rights.
Given that we have had two leases with Chesapeake, both of which required correspondence, which came to all of our addresses, and the fact that in order to receive our lease "bonus" we had to provide them with our social security numbers, and our surface land sale would be on record in Woods County, along with our full names and locations, I can find no excuse or rationale for claiming that they didn't have our addresses. (Have they heard of google???) I think that that was just a lame thought-up-on the spur of the moment attempted excuse to explain why what should have happened didn't. Also, I still can't believe that there isn't some sort of legal regulation that requires them to at least make a minimal effort to find the addresses if their own record keeping has been deficient.
More likely, I can see how with such a large organization that we somehow just fell through the cracks.... However, when the division orders and / or pooling took place, how they could have missed accounting for all legally relevant mineral rights owners in the area is a pretty bad oversight.
I'm convinced we should consult an attorney...they are worth the money compared to attempting to figure things out on our ownwhich could easily take up days and days and still not be sure what we find is current etc. I'm with you Stephanie, I think a lot of things about this are suspicious or at least demonstrates incompetence. However, some of my other sisters are more trusting and forgiving of potentially "honest" mistakes and think we should just let Chesapeake fix things now and do what they tell us to.
I was hoping to at least be able to do some preliminary discovery for amount of gas production and calulate how much money we are talking about. Obviously if it is more than trivial it is worth paying an attorney. If it is close to nothing we'd probably be better of just signing the DO. I have not been able to get the computer access program to the gas production reports to work, but maybe I'll just try to call the commission as Charles has suggested.
I am in the middle of a somewhat similar situation with Chesapeake in Texas. My family owns Non-Participating Royalty Interest (No Lease rights) in a producing Chesapeake well drilled in 2008. They had negotiated & paid surface damages and pipeline easements with each of 3 family members/interest owners between 2007-09 (we have documented proof). They even reported royalty income to the county tax authority in each family members name. HOWEVER, Chesapeake never once tried to contact or provide DO's and production payments to any of the 3 family members. Finally 2-3 months ago i put my facts together and gave them a call. To my dismay they had set up ownership #'s in each name but said they "were unable to locate any of the 3 of us."
As of today i can offer these thoughts.... You can do the work with out an attorney but you need to know the statutes and regulations for you state. That said, if the royalty $'s owed to you are substantial i would recommend using an attorney. In my opinion this is not an "honest mistake" on Chesapeake's part....It appears to be a calculated choice of indifference to mineral owners because there is no substantial regulatory penalty. For Chesapeake the value of your "royalty $'s held in suspense" is much more useful in their daily cash flow even after they pay you the small simple interest $'s penalty. In Texas the statute does not define Compound or Simple and Chesapeake has told me it will be Simple interest. The DO Coordinator and Revenue Sr Coordinator do not return my phone messages and are very slow to respond to emails (if at all). Getting information for Chesapeake is harder than nailing jello to a tree! Absolute professionalism and respect from a landowner (me) has not generated the same in return from Chesapeake.
I'm sorry to hear that you are having similar problems. I totally agree with your perspective. Apparently there are no regulatory teeth in the Oklahoma Corporation Commission...they cannot in any way force a company to pay you what they owe you. Your only recourse is to file suit against them...with attorney fees then eating up most of what you are attempting to recover!!!! Sounds like Texas is not any better... what a racket!!
Good luck to you, Joni
JMH said:
Joni,
I am in the middle of a somewhat similar situation with Chesapeake in Texas. My family owns Non-Participating Royalty Interest (No Lease rights) in a producing Chesapeake well drilled in 2008. They had negotiated & paid surface damages and pipeline easements with each of 3 family members/interest owners between 2007-09 (we have documented proof). They even reported royalty income to the county tax authority in each family members name. HOWEVER, Chesapeake never once tried to contact or provide DO's and production payments to any of the 3 family members. Finally 2-3 months ago i put my facts together and gave them a call. To my dismay they had set up ownership #'s in each name but said they "were unable to locate any of the 3 of us."
As of today i can offer these thoughts.... You can do the work with out an attorney but you need to know the statutes and regulations for you state. That said, if the royalty $'s owed to you are substantial i would recommend using an attorney. In my opinion this is not an "honest mistake" on Chesapeake's part....It appears to be a calculated choice of indifference to mineral owners because there is no substantial regulatory penalty. For Chesapeake the value of your "royalty $'s held in suspense" is much more useful in their daily cash flow even after they pay you the small simple interest $'s penalty. In Texas the statute does not define Compound or Simple and Chesapeake has told me it will be Simple interest. The DO Coordinator and Revenue Sr Coordinator do not return my phone messages and are very slow to respond to emails (if at all). Getting information for Chesapeake is harder than nailing jello to a tree! Absolute professionalism and respect from a landowner (me) has not generated the same in return from Chesapeake.