When contacting Xterra about a revenue statement question, I was advised that they were holding revenue in suspense waiting for signed division orders that I had never received. They supplied the division orders via .pdf documents. Upon review I discovered part of the wells reflected royalty interest calculations based on a 1/8 royalty reserve and part based on a 3/16 royalty reserve. Since all the wells are covered by the same royalty deed and each group of 10 wells were in very close proximity and were covered by the same abstracts, I amended the lower royalty interests to match the higher reserve, initialed all changes, signed the division orders and submitted them via .pdf documents in May of this year. They removed me from suspense and began paying revenue, but the amendments have not been made and I have received no communication on the subject. How long should it take for a review and reply? What should be my next step?
They won’t change your decimal just because you changed the division order. You need to send them your chain of title and proof they are wrong.
Contact the division order analyst and ask for the DOI calculation to see the difference from your own calculation. Maybe these are allocation wells or in different units. What do you mean by ‘royalty deed’? Is this an NPRI that is fixed or is floating?
Your NPRI may also be subject to different OGLs since you have different royalty rates applied in the DO.
This can happen where A owns an NPRI with a floating rate calculated on the underlying lease royalty rate. At the original assignment, X assigns NPRI with floating rate depending on the royalty rate in the lease X signs. Later, X’s minerals are divided between his 2 children Y and Z. If Y and Z sign leases with different royalties (Y at 1/8 and Z at 3/16), then the NPRI will be divided so that one-half is based on 1/8 and the other half is based on 3/16. In this case, A needs to ask for the underlying leases to be able to verify. It can get complicated over the years as the minerals are subdivided into more and more fractional interests. If the NPRI is fixed, then it is always the same. Also, the NPRI is a burden that is deducted out of the royalty rate of the mineral owner. Also, if you prove that NPRI rate is too low and needs to be revised upward, then the royalty rates for the related mineral owners will need to be reduced to keep the overall revenue deck the same total of 100%.
I realize that I failed to mention that I included with the DOs, an explanation of why the RIs were inconsistent. I did the same thing with Cholla a couple of years ago and they acknowledged the error in their calculation and corrected the RI without a chain of title. Since the company has already run their own chain of title to place me on a pay or suspense list, why exactly do I need to pay someone to prepare this information for submission?
Based on the last time I checked the RRC, the as drilled plats had not been posted. Using the planned drilling plat, yes these are allocation wells but each group of 10 wells is virtually identical with only a few feet difference in the abstracts the wells go through, In other words the RI should be almost identical in all wells within each group - certainly not enough difference to account for a 1/8 vs 3/16 factor. Document 1950-8590 in Midland County is what I mean by royalty deed. Unfortunately I can’s seem to figure out how to attach it.
I have been told that I do not have an NPRI, but rather an ORI. Since granted in the royalty deed mentioned above, the interest has only been divided once, equally between my sister in law and myself.
In future, please correctly describe rights such as ORRI. Regardless, you cannot unilaterally amend the DO and expect that to be implemented. You should not have signed and returned the DO for any disputed DOI. You have to contact DO department and work from there.
Are you complaining about my use of the term ORI? Are you aware that the term overriding is a single word? Are you aware that acronyms are correctly formed from the first initial of each word? - Overriding Royalty Interest. With regards to signing, your advice is the exact opposite of the advice I received when I first started receiving revenue - sign and submit DOs to start receiving pay and then worry about corrections.
TD and I dont always see eye to eye, but he knows what hes talking about. Why would you make a post asking for advice/guidance and then critique said guidance when you have no idea what you are talking about? Im not trying to be rude, but since you know it all, why are you asking for advice? Hire an attorney, as its clear you arent going to listen to people that know way more than you do. Best of luck
if your drilling spacing unit is on a township line, you may have a calculated correction. oil producers may use a standard acreage, such as 1,280 acres in 2 sections in my area, and calculate the credit based on that 1,280 acres. or, if you have a non-standard type of acreage in your drilling spacing unit, such as 1,920 acres in 3 sections, they may calculate the credit based on your share of 1,280 acres. in this case, you won’t lose the # of net mineral acres but the calculation will be different than your physical net mineral acres. this happened to our family and i too had questions about it. just be sure to understand what factors are in the calculation.
I was always taught there are no wrong questions. I am on this forum to try to learn more. I try hard to provide accurate context in terms of a back story to explain why I am asking a question. I frequently find that individuals assume their is a flaw in my backstory and instead of answering the asked question(s) post what appears to be off topic comments attacking the backstory. Then they inform me I have not asked the question the right way or provided the right information in the backstory. Does this encourage people to ask questions to learn?
Some of your responses are rude, particularly when you do not like the advice from an experienced person. Rather than try to understand a point, you take offense and attack. For example, you called your assignment a ‘royalty deed’. In oil and gas parlance, this would be generally be a reference to an NPRI, and not to an overriding royalty. In fact, I asked what you meant by a royalty deed. After you finally stated that you were told that you own an ORI / ORRI, I requested that you try to more fully describe the rights at issue, so that people can give you proper advice. This is because calculation of DOI based on NPRI vs ORRI is very different. You immediately went off on an insulting rant that I could not spell or abbreviate overriding royalty interest. I suggest that you start over calmly and understand that when you post a question, it may not be worded clearly to others. Many of us have been in the industry for decades and we can offer you advice, but only based on the detail of your post. So you may need to rephrase it several times for better clarity to the reader. As to the last sentence in your response to me, I have no idea who ever told you to sign any legal document that has errors, especially ones that are adverse to you, but that was bad legal advice. Exxon v Middleton (1981 case) established that you are bound by the terms of your DO, and that it acts as a temporary amendment to the terms of an oil and gas lease, until it is revoked. The oil company is not legally bound by any changes that you make and that they do not accept in writing. So in the future, never sign a DO with an understated DOI. Instead, contact the company, by email and if necessary by certified mail to find out how they made the calculation and get any errors corrected. This is serious because it requires multiple adjustments to the pay deck. More to you means less to another party, whether mineral owner or working interest.
Apparently you and I will never be able to communicate. I cannot perceive any way to meet your unwritten rules about the correct way to format a question. I am a firm believer in treating others as you wish too be treated. I also believe the corollary that the way others treat you must be the way they wish to be treated. I propose a simple solution. Never post on a thread I start and you will never have to worry about a post from me being directed at you hurting your feelings. Look at your post just prior to my ORI post and you will find that you talked down to me three different times as if you are a parent and I am a child. What is the point in telling someone they, in your opinion, did something wrong - it is history and cannot be changed? I have never thread jacked one of your threads as you did this one. There was nothing in the original thread that called for a discussion of how NPRI interest might divide.