Marathon "prior period adjustments"

Anyone else having the issue of Marathon deducting money from 2011, 2012 time periods on their current 2017 checks? Seems to me this would be far beyond any statute of limitations. Marathon has not answered what authority would allow them to go back this far and take money out of current production. This arises out the wellhead computer temperature adjustment problems that the company says it first identified in 2016. Just curious if others have been successful in getting these deductions for 5-6 years ago stopped.

I have been having this problem with Shell. These companies seem to take the position that they can "correct" what ever they have paid you since inception of their operations. I have been fighting with Shell over just what adjustments they are making, and am just getting some responses. They stopped paying the royalties in April and since then, I have been told they over paid my family by about $30k, and are "working it off" but each month, the total isn't necessarily going down. My atty advised to wait until they "finish" their adjustments and then demand explanations, other than a 300 page document with numbers from top left corner to bottom right, as they are likely to do.

Depending on your lease language, they might be able to do this whether or not it is cricket.

In Texas the statute of limitations only allows you to go back 4 years from the date you demand the audit / review / lawsuit over royalties. Waiting for them to finish off their "corrections" could take more than 4 years, so make sure you have evaluated your situation with that in mind. If royalty owners can only back 4 years, I think the operator should be limited to the same when it comes to making corrections.

Exactly, I think you're right, I guess that's why I'm confused. If I tried to get money back that Marathon underpaid me more than 4 years ago, they would just claim the 4 year statute as a defense. But now their 2017 statements make large adjustments 6 years after the fact...

Mr Kitchen, that is not what my lawyer tells me. Statutes of limitation apply in different situations, some are 3, some are 4, others at 7, but my lawyer tells me it might be a pretty expensive fight and there are no caselaw precedents to deal with.

In Texas there is a 4 year statute of limitations for overpayment or underpayment of royalties. This applies to both royalty owners and royalty payors such as oil and gas companies. However, this statute of limitations only applies to what you can recover in court. The operator can make internal accounting adjustments from any period it wants, even if more than 4 years prior to the adjustment. These adjustments are made automatically in a computer system and companies do not take statutes of limitation into account when this happens.

If you are being adjusted from a period more than 4 years before the date of the adjustment, you should send a certified letter requesting that they reverse the adjustments that have passed the statute of limitations. If they don't do this, you have a legal claim against them for underpayment of royalties, and your 4 year statute of limitations period begins to run from the date of their adjustment, not from the date of the original production.

It seems as though Shell is complying with that in my case. My last check from them was in April 2017, and the first adjustments appear as 4/13 expenses. Thank you for your comment, Andrew.