Late last year I signed and returned Division Orders from Plains Marketing and received back payment of royalties owed from inherited properties.
Looking at the royalty statement, all royalty payments seemed to cease around May or June of 2013. I finally contacted Plains this morning, and they say they are not showing any production and to contact the operator. The operator is now Tundra Operating LLC. The operator that is notated on my royalty statements if Forza Operating LLC. It appears that there was a change in operators around the time all of my royalty payments ceased. I really do not understand this at all (which I am sure is obvious), but why would a change in operators mean a complete stoppage of production? I was only receiving several hundred dollars a month when Forza was the operator, but I just do not understand how it can go to absolutely nothing when a new operator takes over?
Any help would be greatly appreciated as I am very new to all of this, and I am having a difficult time getting up to speed on mineral rights.
The new operator may have intentionally shut in the well for one of several reasons. They may wish to stimulate it more in order to increase production, if it is gas well they may be waiting for higher prices. I would suggest contacting the governing body that does inspections in your state or if nearby, going to the well site and ask some questions. You may be owed some back payments or not. You own mineral rights in a drilling unit, the amount of the royalty percentage on the original lease, and the net acreage you own in the drilling unit, determine the fractional amount you receive of any oil or gas produced.
Check your state regulatory website to verify the status / production of the lease. You would also want to check your lease to see what terms were agreed upon with the operator to allow a shut-in or non-producing status to continue before the lease is terminated (once you have verified it is not producing). There are additional things to consider, but I would start there. If they are re-working the lease it will likely still be held by production, but again read your lease terms.
Unfortunately, I have never seen the original copies of the leases because they were inherited (and I think the original leases were inherited by my deceased father from his deceased mother). I have only seen the Division Orders from Plains Marketing. I don't even know the API numbers. I feel so lost in all of this.
The wells are located in La Salle, LA and Gregg, TX. The only information I have pertaining to them are the lease numbers from Plains Marketing. The wells are split between oil and gas, and I have both Royalty Interest and Overriding Interest depending on the well. I know these properties are old and probably will not produce much in the next couple of years, but I just find it odd that as soon as a new operator took over, that production completely halted on properties that were producing.
Do the division orders have a legal description? What is the lease number (it may an internal lease number or a RRC lease number)? Do you know what year the lease was filed?
Since you don't have copies of the lease, you need to find copies of the leases which should be filed in both counties you mentioned. Texas has a bunch of online services where you may be able to search for them. Some counties have free online access to the records. Otherwise, you will need to call the county clerk's office and find out how you can obtain copies. Some counties won't work with anyone, and will refer you to a title company. That upsets me because they are public servants and should provide better assistance but I have experienced that a few times. Gregg County I found records online (service for a fee) back to 1982.
It is worth following up on. You want to know what minerals you own as new formations are being discovered and produced especially in the states you have interest in those wells. Your ancestors would want you to know your land and be able to continue to receive income now or in the future.
Thanks again for the replies. I really appreciate it!
I was able to find production data for the Gregg, TX properties from the RRC#'s in the property descriptions on the Division Orders. Those are operated by Quantum Resources.
The properties that I am concerned about are the La Salle, LA, which are now operated by Tundra. I am not sure how to look the data up on these. I have attached the original Division Order (with my personal information removed) as PDF files. There are property descriptions, but I am not quite sure how to find information on them from the Louisiana Department of Natural Resources. These are the properties that were previously producing when Forza was the operator.
In the future, should I be notified when the operator changes?
I was able to find information on the La Salle, LA wells on the SONRIS system by well serial number. I found multiple Amended Permits to Drill For Minerals and multiple Optional Applications to Amend Operator. From what I briefly looked at, these were dated on or around May 1, 2014, and Forza is listed as the former operator and Tundra is listed as the new operator.
I also was able to look at some production data from the property (not sure if I looked at the correct category), and the wells have been producing for the last year. It would seem that Forza has not provided Plains Marketing with any production data though so that they can issue royalty payments? Am I interpreting the data correctly?
If I am looking at the data correctly, and the wells have been producing, I don't know why Plains told me there was no production and therefore no royalty payments. I am so confused! lol
It looks like your Louisiana leases are limited to no more than 100 feet below the top of the Wilcox group. If anyone is trying to amend/modify/ratify your leases there I would be extremely cautious, as they may want to drill into different formations. I would rather negotiate a new lease for different depths / formations than ratify and existing lease. Either way, the first page appears to have provided a book and page number that references the lease. You also have some legal descriptions too. Get in touch with the La Salle Parish recorder's (or clerk's) office and see if you can get a copy of the book and page they mentioned for your lease.
I have not received any documentation from anyone trying to amend/modify/ratify the leases. I will try to get in touch with the La Salle Parish recorder or clerk though to see if I can find the aforementioned information.
I was just curious as to why they went from royalty-generating properties (albeit very small) to absolutely nothing for the last 12 months. Like most of the properties I inherited, I figure they are probably worth very little.
RMG it is difficult to tell what your minerals are worth at this point. It appears there are many wells included in your lease, which makes me thinking it probably has more value than you think (unless the wells are dry or plugged). The division order never specified (from what I could see) what your ownership is for the minerals. Do you own 100%? 25%? 1.5%?. The acreage must be sizable because there are so many wells listed that your lease covers. A new operator may be taking over leases that the previous operator neglected and did not produce to the full potential. This happens frequently in fields that have been produced for years. Some operators are just more prudent than others. When you find copies of the lease(s) you should be able to verify how much land was leased and hopefully you have other ways to determine how much mineral interest you have within the land that was leased. There's much more information that needs to be reviewed before determining the value. Hopefully it is better than you think, and hopefully the new operator has plans to maximize production and not sit around on the assets.
To be perfectly honest, this is all Greek to me. I have been trying to get up to speed on all of this, but I am having a difficult time, especially without copies of the original leases.
I thought the percentage was on the first page of the Division Order?
It appears that the new operator is basically the same as the old? Tundra appears to be an arm of Forza (old operator). Forza and Tundra have the same contact mailing addresses and telephone numbers in Sping, TX. I have no idea what is going on other than Forza transferred operations to Tundra via an Optional Application to Amend Operator (which I found on the Louisiana SONRIS system under well documentation) around the beginning of May this year. Since Forza has not been paying me for the last 12 months, I doubt that Tundra will either. I really am clueless as to what is going on.
RMG, my apologies. Your royalty and override interests are on page 1. It appears you have two interests each in two different leases. The operator may have just simply added another entity to their corporation and transferred these leases to the new entity. Not uncommon. What we really need to do is run the numbers against SONRIS data. It seems like they have a wealth of information on their site. Unfortunately for me, it only works on my home computer! Definitely try to get ahold of original leases.
Kitchen - I have looked at the production data on SONRIS for several of the wells mentioned on the Division Order, and they have been producing for the last twelve months according to the data. Not huge amounts of production, but there is production - which does not coincide with what Plains Marketing has told me. I will try to get screen captures of some of the data later and post them if I am able to.
When searching for the original lease, whose name do I search for? Since I believe these leases were originally my grandmother's leases, do I search under her name? Or am I way off base here? I am not sure how this works.
Thanks for your help. I am learning so much from this, and you have spurred an interest to learn even more :)
I would search under her name if she is the one who signed them. Often times people search by the legal descriptions. If you were at the county recorders office, or at a title company, you would often search all instruments filed in that township, section, range, until you found the proper lease. We will need to see the production numbers and the lease terms to get a better idea on what royalty amounts you should expect to receive.
I have not been able to find anything online in regards to the original leases. I am no where near Louisiana, so physically going to the county recorders office is just not possible.
On the SONRIS system, there is production data for most of the wells. Without the original lease, I am not sure what to make of it, but I do feel that I am owed some royalty payments for the last year. Plains Marketing (from whom I receive the royalty payments) has been absolutely worthless.
I am not quite sure what to do at this point. I do feel something is just not right though...
Your division order states "Pursuant to the recorded affidavit of heirship in the matter of x x; Book 355 Page 832 LaSalle Parish, Louisiana". If you don't have a copy of that affidavit, I would request for a copy of it from LaSalle Parish. The affidavit might have the book and page numbers of the lease(s) we are looking for. Won't cost you but a few dollars at best. Call them and see. Some counties are really nice and will email you copies (sometimes for free!). Kindness still goes a long way in a few parts of the world. Just ask for a copy of the affidavit filed in the book and page mentioned above. It's a start anyways.