I'm very concerned that the overriding royalty payments are getting lower and lower.
I inherited some gas and oil wells in Colorado (Wattenberg Field). I have followed my mothers overriding royalty payment for Nobel Energy, and several others who leased the section. I have records going back 10 years and they have never been this low.
The payments have gotten smaller and smaller ever since my mother left me the overriding royalty interest. At one point just before she past away she got over $10,000 payment. However most of the payment have averaged a couple of thousand may a little less maybe a little more.
Then the royalty was left to me. Now the monthly check are below $100.00. At one point I received a descent check but that was it.
Now my statement has entries that go back several years, all the way back to 2009 and most of those entries have negative entries.
What do the negative numbers represent? There are multiple negative entries on each well that are duplicate amounts. These negative amounts reference back as far as 2009. WHY?
I know prices have everything to do with it. I need to be educated about the statement and the negative entries. I understand the acronyms listed on the statement. I don't understand why they go years in arrears and have negative entries.
Please help me understand.
Can you post a statement with your personal information removed/blacked out?. Make a copy black out your personal and post it because nobody here is going to know what the deductions are for.
Possibly your well/s changed hands and your current operator charges you for things your previous operator didn't. I think they usually don't go back and add charges from before the sale date but I see no legal reason why they could not.
Alternatively, production could have dwindled to almost nothing, once again, nobody here would be able to tell if that is the case because we don't have your statements for the last few years. You may be able to look at gross production on your statement and see if production dropped precipitously.
The answer to the question, why? Because they can, probably. Look to see if new charges have been added.
I hope this helps.
Without seeing the statement we can only guess.
There should be a key on your statement telling what the codes are. My guess is that they are charging you for compression, transportation and a whole plethora of other charges. Read your lease. Is it a deductions free lease? If so, you may have a case.
Unfortunately, the legal expense to recover will probably exceed the recovery. Oil companies know that. They do what they do.
However, we now know who we will never lease any more land to. Rob me once, shame on you, rob me twice shame on me. Oil companies are just shooting themselves in the foot. They sell their honor so cheaply.
The offsetting numbers for the most part (in my experience) represent adjustments to gas quality (BTU content) which can go back several years. Typically, when you net everything out, it amount to bupkis.
As to the cost reduction, it is GENERALLY one of two things. Less production or less value of the product sold. Sadly, many times both.
Check your volume produced and I will bet my lunch money that you find your answer.
Best regards,
Buddy Cotten
Thank you for your response Mr. Kennedy
Please see the attached pages with our private information redacted. I hope this will help you educate me on what all this means.
r w kennedy said:
Can you post a statement with your personal information removed/blacked out?. Make a copy black out your personal and post it because nobody here is going to know what the deductions are for.
Possibly your well/s changed hands and your current operator charges you for things your previous operator didn't. I think they usually don't go back and add charges from before the sale date but I see no legal reason why they could not.
Alternatively, production could have dwindled to almost nothing, once again, nobody here would be able to tell if that is the case because we don't have your statements for the last few years. You may be able to look at gross production on your statement and see if production dropped precipitously.
The answer to the question, why? Because they can, probably. Look to see if new charges have been added.
I hope this helps.
1886-OverridingRoyaltyconcerns.zip (910 KB)
Mike, I can't seem to manipulate the format, and it's sideways, when I expand it enough to read I lose too much of it to gain any understanding from it. It it would not be too much trouble, could you post it as a PDF?
Let me try again to send the right file. This a copy in Microsoft Word
1883-OverridingRoyaltyStatement.docx (340 KB)
1884-ORRIpage2.docx (360 KB)
1885-ORRIpage3.docx (336 KB)
It looks like prior payments to you were made on three different lines. This could just be the payor entering the information into their payment system that way or even three separate purchasers. Operator periodically go back and make adjustments. On your check they are adjusting the volume very little and therefore taking back a few cents. After they take back the prior payments, they are repaying at the new volumes and amount due to you. This is resulting in a lower price also.
You have blocked out the names of the wells. This will prevent anyone from checking for proper volumes for you. The only information that you should take out is your name, address, payee number, and check number.
If the payments have been dropping like you said, I would go back and look at your mother's checks and see what wells she has been paid on and at what decimal. Sometimes a change in ownership results in mistakes being made. For-instance, I gained ownership in a section and the operator only paid me for the wells that were already drilled when I gained ownership. It took months longer than the allowed amount of time for them to make payment on newer wells, and only after I told them what they need to do.
After reviewing your mother's check detail, it may be advantageous to find the original documents that created the override. You could have more properties that are now in production that were not in production for your mother. In fact you should actually find out how she gained the override. Was her father a geophysicist of was your father a geologist, uncle, etc. From my experience not many people have overrides in one county. Usually a few counties and a lot of time in multiple states.
Thanks Brian
I will rescan these pages and have only the items you have listed blocked out..
Thanks for you response.
Could they be producing it just often enough to keep it held by production? It looks like they pay you for it then go back & say 'oops, we made a mistake & it didn't produce that much'.
I can download more statements with only my name, check number owner number blocked out. Please tell me everything you need to look at. I normally get anywhere from 30 pages up to 77 pages of each statement. Would you like to view all of them? Would you like to see like 10 pages from this month, and the same wells statement from years past...? Please let me know...
The other question I have is this money was my mothers when she past I put an add in the paper for person, companies, to make claims against her estate or all claims are null and void. Does this not apply to the gas and oil wells?
here are more statement information
Yes , I received a voice mail message from Noble Energy "Royalty Relations" that they had over paid my mother and they were making adjustment and were taking it back.
Go Fast said:
Could they be producing it just often enough to keep it held by production? It looks like they pay you for it then go back & say 'oops, we made a mistake & it didn't produce that much'.
Yes , I received a voice mail message from Noble Energy "Royalty Relations" that they had over paid my mother and they were making adjustment and were taking it back.
Mike Garretson said:
Yes , I received a voice mail message from Noble Energy "Royalty Relations" that they had over paid my mother and they were making adjustment and were taking it back.
Go Fast said:
Could they be producing it just often enough to keep it held by production? It looks like they pay you for it then go back & say 'oops, we made a mistake & it didn't produce that much'.
Here are the statements in a PDF...
FYI
I have load the file in a PDF. It took me a while to figure out how to do it. If you would be so kind to look at them I would greatly appreciate your opinion.
r w kennedy said:
Mike, I can't seem to manipulate the format, and it's sideways, when I expand it enough to read I lose too much of it to gain any understanding from it. It it would not be too much trouble, could you post it as a PDF?