Problems transferring ownership to receive revenue checks

My sister and I had joint ownership of royalties in Dewey County, OK. After my dad died in 2003 she and I had my dad’s attorney file in Dewey county that we had joint ownership. If one of us died, full ownership would pass to the survivor sister. She passed away two years ago. Then I received payments from Derby Exploration from royalties resulting from a well that was drilled about a year ago. I have completed all paper work, sometimes twice, to show I’m sole owner, plus an address change. They verified to me on phone early December that I was sole owner, paperwork was completed, and I should be receiving my sister’s money late December or first week of January. Today I received my monthly check, but no backpay funds. Sometimes I think Derby and their accounting firm are not in on the same page. There was a big delay for checks in November because of a switch on software. I must say, I do get info from Derby but I’m just worried about getting my money! Any advice?

It sounds like there are “hung funds” still in your sister’s name that need to be released to you. When the new well began producing, Derby didn’t know your sister had passed away (or that’s what it seems). The had already set up the new division of interest ownership record with both you and your sister in it, in order to issue the division order that you got showing they were crediting 50% to you and 50% to your sister. That’s when you contacted them and started providing paperwork to get her account rolled into you, as the joint survivor, right?

And now Derby is telling you that their records show they are crediting 100% to you, which the December check probably shows you owning the full 100% decimal now, but that check only covers current production (November oil, October gas, probably)? But there are no prior months of production on the check paying to you those months of royalties previously credited to your sister.

Since your sister couldn’t have signed her division order for the new well, Derby placed her account in suspense for “unsigned D/O” waiting to get it returned. Every month of production since date of first sales were credited 50% to you and 50% to your sister until you sent in all of the paperwork. But it appears that Derby then dropped the ball.

All databases work essentially the same way. After receiving all the proper paperwork from you, a “transfer of interest” was done electronically from your sister’s account to your account. But there are always two pieces to any transfer from one account to another.

First, there is the decimal piece, involving only the ownership record. That part of the transfer process removed your sister from the revenue distribution division of interest record and gave her decimal to you.

Second, there should have been a transfer of money (revenue funds) out of your sister’s account and into yours). That is when the money should have been removed from your your sister’s account and put into yours, and at the same time that was done, that money was supposed to be moved from “suspense for no D/O” to “Pay” when it went into your account.

You need to call Derby back and ask them to look to see if you have funds in your name that are in “suspense for unsigned D/O”. If you have no such suspended funds, have them look only at your sister’s revenue distribution record to see if she still have money sitting in their database, locked in “suspense for unsigned D/O” status.

They will need to do the type of transfer process that will move the money from “suspense for unsigned D/O” to “Pay” status, and that money will be in your account. This is called “releasing suspended funds” and when that step is overlooked, it creates “hung funds” in the database system, funds that in reality are cleared to be paid out to whoever owns them.

Let us know if this was the problem, and Derby corrected it.

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No check today or a return call from Derby. I live in Washington state now and it’s difficult to make phone calls because of the time zone. I got my first check in March 2019. Before then, I had to file paperwork-maybe for taxes. I then had to file more paperwork with my sister’s death certificate. I’ve done this twice now. I will call tomorrow every hour until I get a person! But could you please tell me what a D/O refers to before I call?Thanks for your help. I can’t believe this is so difficult for Derby!

DO refers to a Division order. Your question should be where is the revenue that would have been paid to your sister since her death, but was not, up until you began receiving 100%. Patience is a virtue in the oil & gas business.

I am trying to do this now any help would be appreciated such as procedure