MDC Reeves Bankruptcy

I have a lot of Wells in different sections that mdc Reeves is the operator. I have been receiving royalty checks each month. I received notification that they are filling chapter 11 bankruptcy. What does this mean for those of us that own mineral.

Should have no effect on mineral owners. MDC will either reorganize its debt with it’s creditors or will be sold off to another company that will become the operator. Nothing that you need to do. You should continue to receive royalty checks.

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Todd- Not really that simple.

I have multiple wells that MDC is operator… what do think will happen now. They have been a slow pay for the last 6 months

John19, it looks like MDC filed Chapter 11 in federal court in Delaware a week or more ago.

From the little I’ve found on line it looks like this may not be one of those smooth, prepackaged reorganizations like some companies manage. Apparently some of the unsecured creditors are fighting MDC’s petition and making claims of mismanagement.

Appreciate if you would post an update if you get further notices. As a mineral owner in a MDC unit where they recently drilled a first well but apparently haven’t fracked yet it may be hard to figure out our status and what to anticipate.

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Mr. Caldwell,

What do you suggest we do as mineral owners? Do we just sit tight or do we need to retain our own legal counsel?

Thank you.

I have not received royalty check in over 2 months. I called and they had no time table as to when they would send anymore out. What do you do?

Hi John19, Here is what I received at the end of November. I was thinking that they would send out a check on December 31st, like they did last year. I did send a follow up email just a few minutes ago. If I hear anything else I will post again. -MaryB

"As a part of the chapter 11 filing MDC was required to void all outstanding checks. However, we will resume making Royalty owner payments in early December and will stay current with royalty owner payments going forward.

"As a part of the filing MDC is drafting a royalty owner motion for the courts. That motion will allow MDC to catch up any outstanding royalty payments, including the check that did not clear, and will allow MDC to resume paying royalties monthly going forward. "This temporary delay is administrative only and a part of the bankruptcy process We are confident that you will be caught up in December.

Do not hesitate to reach out if you have any questions."

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It doesn’t look like this bankruptcy is likely to be resolved any time soon. A big real estate development the owner/CEO of MDC has underway in New York City that doesn’t involve MDC, but includes some of the same lenders, seems to be making things worse in Reeves County.

At a hearing on the 16th the judge denied motions that had been filed by MDC’s lenders trying to take over and apparently let MDC temporarily continue operating. But that original judge then resigned from the case and a new one was appointed. The next hearing is scheduled for December 30th and the lenders have filed motions for subpoenas and interrogatories to start early next month.

Hopefully MDC will be paying royalties again soon but when they can drill, or frack wells they’ve already finished, is another question.

This is an fyi. My wife has royalty interest for wells in Reeves county, via MDC. Just a few days ago, she received a check for royalty payments for one well, after virtually nothing all last year. (This is a well that was drilled back in the fall of 2018, with production starting 4/2019.) She sent them emails with questions, including why payments for production for some other months were not included in the check. Moreover, she also has interest in a 2nd well they drilled and has not so far received a division order for it.

They responded within a day saying that they are having to go through the US Treasury court system (Jan. 20th) to get approval to release other funds to royalty owners that have not been paid. Moreover they are saying that division orders for the 2nd well she has interest in should go out soon. After that they will seek approval to disperse funds for that well.

I might say that MDC folks have given all kinds of excuses to my wife over the past year. She was told division orders were going out early last fall. Of course that did not happen; and it was before the bankruptcy filing. To say that I am skeptical about what they say is an understatement.

The silver lining here is that for my wife and her family members, at least some funds went out in the face of this bankruptcy stuff.

An additional note: over time I have usually relied on the Texas Railroad Commission website for various documents and stats about drilling and production activity. Perhaps old news to quite a few of you, but I should like to share another web link at the Texas Comptroller website.

This page allows you to log in if you have registered. But public information does not require a login. Over on the left you can click on the link “Lease Drop - Crude Oil” that takes you to another page where you put in information such as the drilling permit number and the months you wish to have data for. If you do that, the query system comes back with production stats by month for your well, such as Taxable Barrels and Net Value. These figures should reconcile with production and sales stats from payment stubs for checks you receive. I was advised by an oil company president that this site is a better one to use to check your figures. In thinking about it, it had better be accurate on the part of oil producers/sellers in that it is the basis of the taxes they pay to the state.

I also note that there is also a page you can visit to check natural gas stats. On the URL link I cited, another link “Lease Drop-Natural Gas” does that.

I would be interested if other of you out there have received checks from MDC lately.