Lawyers targeting operators?


#1

Have several producing wells on our acreage. Received a letter from a lawyer yesterday indicating that they would be investigating our operator for shorting royalty payments. They got our name from the public records. Is there anything to this or is this just a potential harassment for the operator? Anyone else received letters like this?


#2

Who is the operator?


#3

Which operator??? I think we have a problem too.


#4

Seems to be trolling for business. One law firm has sent 2 identical letters about possible underpayment of royalties - each citing a different oil company.


#5

That’s interesting, I agree that it is most likely trolling for business… But anything to put a little oversight on these operators with their marketing expenses and some of them with their overly confusing presentation of check detail, which I may be just looking at it from my side of the fence, seems at times that somebody would have had to have gone out of their way 2 design the check detail provided, I’ll refrain from naming operators, but I do believe some are better than others. And I sure wish more standardization would come amongst the industry


#6

I do agree with Ben. For those of us who are new to this, it would be nice to see how the $ amounts are figured. Even if we just had some idea


#7

I want a lot of detail on the check stubs - gross (100%) and net (royalty DOI) sales, severance tax, any claimed expenses and net. Some operators hide the costs by netting them out of the gross sales. For each payor, you just have to get used to the layout. And to understand if they are separating gas and liquids or combining them. In general, standardization will result in less information. There is no overseeing agency for check stubs. The law firm sending out letters may be trying to form a class action suit in order to collect its large fees - from what I have seen, little ends up going to royalty owners in that situation.


#8

I wouldn’t necessarily call it trolling for business. There are some bad actor operators out there that purposefully make things ambiguous and difficult to understand what you’re getting paid. Some also play games with what price is represented on your check stubs (i.e. whether transportation or marketing fees are netted out of the price). Some also don’t represent all of the details of what fees are being charged out.

There have been some class action lawsuits filed against bad actor operators, which resulted in settlements that have benefited mineral owners. A recent class action that just settled is in the link below:

https://seekingalpha.com/news/3382272-chesapeake-reaches-7_75m-settlement-pennsylvania-royalty-class-action

Do you mind sharing what lawyers are sending letters? I’d like to find out more from these lawyers, and share with the group.


#9

I have trashed these letters. They are clearly speculative as the author had no real claims to make and included language such as it is possible that X company might be doing something bad but no one really know and we got your name off the property tax records. My experience with class action suits is that the much of the cited total cash settlement goes for legal fees plus additional for costs incurred and relatively little cash is left for the class members. Mineral owners are better off spending the time and effort to find the data on state websites (such are RRC and Texas Comptroller CONG) and compare volumes and revenues to their checks, to learn to read the check stubs, to understand lease terms, etc. This forum is a good place to ask questions to get you started.