My girlfriend has some mineral rights in grady county Oklahoma so does her sister. A lawyer called last year for permission for access drill ong something she was gonna get paid for. Her sister said yes for her rights my girlfriend said no on her rights. Thought that was that. Same lawyer calls and asks her to fill out a w2. Is that a sign they have been drilling with out permission. And if so what are our options.
Actually, if your girlfriend said no to leasing, then she was probably force pooled and drilling commenced and that is perfectly legal. If you post the section, township and range, we can help with information.
Without a lease, she would become a working interest owner in the well. Any net revenues, i,e. oil income less operating expenses for her share of well, would be income to be reported on Schedule C. The operator will need a W-9 form listing her name, address and social security number before sending any net income to her. The data will include the gross sales and deduct costs and severance taxes. At the end of the year, the operator will send a 1099-misc form reporting the income as earned income. She should not receive a W-2 as she is not an employee of the oil company. It might be advisable to consult her tax accountant for advice.
Since Grady is in OK, she may only be a royalty owner due to the OK pooling laws. TX is different. Don’t panic about the working interest part. You need more information, so the S-T-R will help us answer your question.
Good to know about Oklahoma. Operator will still want a W-9 to be able to report royalties on 1099 at year end. To be careful, it is best to ask the attorney/caller for an email explaining exactly what is being requested and why. Notes from phone conversations can get misunderstood.
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