Reconciling royalties paid with production reported

Hi there-

I have been comparing the gross volumes for oil and gas reported on my check stubs from the oil company and am finding huge differences between the production reported on the check detail and that info reported to the railroad commission.

Does anyone know of a CPA firm that specializes in reconciling amounts reported to royalty owners with that the oil companies are reporting to the RRC?

Before you spend money on CPA or anyone else, be sure you understand your check volumes and RRC disposition volumes and also look at Texas Comptroller CONG site to see the volumes and sales being reported to State for severance taxes. Re check, are you being paid on DOI for all acreage in well or on a tract basis? If you own 40 acres out of 80 acres in well and royalty is 20%, then your DOI (royalty decimal) will be 0.10 = 0.20 X 40 acres / 80 acres. Your check will reflect 100% of sales. On tract basis, your DOI is 0.20 = 0.20 X 40 acres / 40 acres. In this case you wI'll be paid on 1/2 of well volumes and sales. This is because the well volumes and sales are being divided between the 2 40-acre tracts. Same net result to you, but loo j s different on check.

Gas can be tricky. Gas usually goes to a plant for processing into liquids and dry gas. After removing liquids/products, the volume of dry gas is less because it shrank. Some companies pay liquid products separately from dry gas. So the gas volume on check is less than wellhead production. Other companise add the liquid products and gas sales together and report as a single payment using wellhead volume. I have seen a few companies that add the liquid products and gas sales together and then report using smaller plant tailgate volume and so price looks really high.

Go to Texas Comptroller website and to CONG and look at sales reported for your wells. You will find oil reports and natural gas reports separately. Requires 6 digit id and this is the 6 digit gas RRC id or for oil well we it 5 digit id you add a 0 in front. Add county to be sure to only get your well. Dates are 4 digits, with first 2 being year and last 2 being month. As with RRC, you can ask for range of months. Gas may or may not be divided out from liquid products. Your check volumes and sales should match this data. I will comment that few CPA know how to do this and may charge a lot to create spreadsheet. If you have a lot of wells and revenues, consider subscribing to Drillinginfo which pulls the Comptroller sales into the well data. It is always best for you to learn how to do this and be in control of your money.

Thank you so so much for this info. We are on the same page. I am a CPA and know that none of my co-workers ( I was with EY for 14 years) would have experience in figuring out the difference in volumes.

I requested the severance tax reports from Comptrollers office on Wednesday and hope to get them soon but will try to pull the info as you have requested myself. Thanks again for responding.

To download the sales and volume information directly from Texas Comptroller website - use link below. If you get a message that cookies are required, hit the login and you will be on the page. Log-in is for oil company to file reports. You select Public Information on the left side of page. Lease Drop - Oil for oil data and Lease Drop - Gas for gas, liquids and condensate from gas wells. Then enter the data fields (RRC lease id with 6 digits, county and date range.)


Terrific info. Thanks.

If you run into any road blocks, let me know and I can easily help you.

Bob Malone, Malone Petroleum Consulting