Too bad I never thought that I would ever lease my Mineral Rights or I would have researched before instead of after. It is too late now since I already signed the dotted line. I do not have any regrets, just questions. I do not want to be taken advantage of and that is the reason for this post. My biggest question at this time is: How do I know that the oil royalties paid to me are actually oil produced on my lease? Is the amount of oil produced based on what the driver of the transport puts on a piece of paper or is there more fail safe ways to prove this. My ignorance on this issue is what makes me wonder. There are too many ways for a driver of a transport to be bribed or for a dishonest driver to sell oil on the side if the only way to know what was produced and where it was produced lies totally on what he puts on a piece of paper.
Can anyone shed some light on the procedure and put my mind at ease? I hate to not trust people but I have known some in the past that did some mighty dishonest things to get ahead. I hope that there are many checks and balances from the time the oil is produced until it is sold and paid.
This would be in Central Texas
The following NARO forum link has an interesting (?) horror story about an owner, Debbie Dorer, catching them in the act - 16 cameras, locks on gate, etc. - then monthly production went from 400-500 barrel per month to over 1500+. Read for yourself. Her entry is the fifth down.
TO CATCH AN OIL THIEF
My aunt used to write to my father about how a certain oil and gas producer in an unnamed county in West Virginia used to go around with a tanker truck at night stealing oil. A landman told me recently that it is still happening.
You guys are scaring me!!!!
I knew someone who drove a truck & hauled water from leases 20 years ago. When he needed extra money, he would pull oil & sell it as 'bottoms'. The disposal operators knew what was going on & they paid a fraction of what it was worth. But the point is, there are some unscrupulous operators out there.
So, after all of this, It sounds like it all falls to the honesty of the truck driver. This does not sound good. I wonder how many stories there are of a transport driver picking up oil in one location and claiming that it came from another. It is hard for me to believe because there are so many oil wells out there and you would think that there would be a system in place to keep these guys honest.
As a number-cruncher from a long-time wildcatter/operator family, I would
like to point out that the primary check/balance is the integral honesty of the
operator and the "pumper". The pumper is the person (hired by the operator)
who, every day, is supposed to "stick" each tank. This gives him/her a reading of
the quantity of oil and/or other liquids in the tank. This is supposed to be reported to
the operator. When the quantity of the measured oil in the tank(s) decreases, the
pumper should know and report the decrease.
I wonder how closely the operators and the pumpers account for (or watch) the daily
fluctuations of the inventory in the batteries.
My point is that carelessness of the operator and its pumper(s) would have to contribute
to the success of the truck driver. S/he should not be able to steal it without help.
Let's see what you think about this scenario, Could it be possible? ( I see black helicopters over my home) LOL
The Operator has 2 leases (A and B). He needs funds to do whatever. One of his buddies owns the majority of Lease A. Lease B has plenty of production. The owner of Lease A tells the operator that he will go along with the scam. So Lease A and Lease B both produce 100 bbl per day. When they transport the oil to sell. 180 is sold from Lease A and 20 from Lease B. (So it says on the transports paperwork) Then the owner of Lease A pays the operator for 40 bbl and makes the extra 40 for himself. Who would know the difference if the checks and balances are totally relied on the honesty of the Operator and who he hires. Should a mineral rights owner be concerned or is this nothing to worry about? I don't suspect anything I am only curious.