Re: Billy - in similar situation in that my great grandmother signed lease back in 1960s. Lease also held through the years through natural gas well and then drilling in late 2012/2013 for oil. Exciting isn’t it! Even with only a 1/8 royalty. Drill baby drill! What are you doing about surface use agreement? Trying to work towards that now.
Devon sent first production report to rrc in march 2013 still no D.O. on well in Wise County.
Re: Billy - what does your lease say about payment schedule? Ours says 60 days. Not an attorney, but suggest looking at sending certified letter to oil company referencing section 91.404(b) - royalty owner requests.
Hi, Billy! This is lengthy but I think covers it. I collected Statutory Interest not too long ago and it was a good chunk of change. This msg. bd is telling me this is too long so I’ll split it:
TEXAS TIMELY PAYMENT LAW
§ 91.402. TIME FOR PAYMENT OF PROCEEDS. (a) The proceeds derived
from the sale of oil or gas production from an oil or gas well located
in this state must be paid to each payee by payor on or before 120 days
after the end of the month of first sale of production from the well.
After that time, payments must be made to each payee on a timely basis
according to the frequency of payment specified in a lease or other
written agreement between payee and payor. If the lease or other
agreement does not specify the time for payment, subsequent proceeds
must be paid no later than:
(1) 60 days after the end of the calendar month in which
subsequent oil production is sold; or
(2) 90 days after the end of the calendar month in which
subsequent gas production is sold.
(b) Payments may be withheld without interest beyond the time limits
set out in Subsection (a) of this section when there is:
(1) a dispute concerning title that would affect distribution of
payments;
(2) a reasonable doubt that the payee:
(A) has sold or authorized the sale of its share of the
oil or gas to the purchaser of such production; or
(B) has clear title to the interest in the proceeds of
production;
(3) a requirement in a title opinion that places in issue the
title, identity, or whereabouts of the payee and that has not been
satisfied by the payee after a reasonable request for curative
information has been made by the payor.
© (1) As a condition for the payment of proceeds from the sale of
oil and gas production to payee, a payor shall be entitled to receive a
signed division order from payee containing only the following
provisions:
(A) the effective date of the division order, transfer
order, or other instrument;
(B) a description of the property from which the oil or
gas is being produced and the type of production;
© the fractional and/or decimal interest in production
claimed by payee, the type of interest, the certification of title to
the share of production claimed, and, unless otherwise agreed to by the
parties, an agreement to notify payor at least one month in advance of
the effective date of any change in the interest in production owned by
payee and an agreement to indemnify the payor and reimburse the payor
for payments made if the payee does not have merchantable title to the
production sold;
(D) the authorization to suspend payment to payee for
production until the resolution of any title dispute or adverse claim
asserted regarding the interest in production claimed by payee;
(E) the name, address, and taxpayer identification
number of payee;
(F) provisions for the valuation and timing of
settlements of oil and gas production to the payee; and
(G) a notification to the payee that other
statutory rights may be available to a payee with regard to
payments.
(2) Such a division order does not amend any lease
or operating agreement between the interest owner and the lessee or
operator or any other contracts for the purchase of oil or gas.
(d) In the alternative, the provisions of Subsection ©
of this section may be satisfied by a division order for oil
payments in substantially the following form and content:
Here you go…
§ 91.403. PAYMENT OF INTEREST ON LATE PAYMENTS. (a) If payment has not been made for any reason in the time limits specified in Section 91.402 of this code, the payor must pay interest to a payee beginning at the expiration of those time limits at two percentage points above the percentage rate charged on loans to depository institutions by the New York Federal Reserve Bank, unless a different rate of interest is specified in a written agreement between payor and payee. (b) Subsection (a) of this section does not apply where payments are withheld or suspended by a payor beyond the time limits specified in Section 91.402 of this code because of the conditions enumerated in Section 91.402 of this code. © The payor’s obligation to pay interest and the payee’s right to receive interest under Subsection (a) of this section terminate on delivery of the proceeds and accumulated interest to the comptroller as provided by Title 6, Property Code.
§ 91.404. NONPAYMENT OF OIL AND GAS PROCEEDS OR INTEREST. (a) If a payee seeks relief for the failure of a payor to make timely payment of proceeds from the sale of oil or gas or an interest in oil or gas as required under Section 91.402 or 91.403 of this code, the payee must give the payor written notice by mail of that failure as a prerequisite to beginning judicial action against the payor for nonpayment. (b) The payor has 30 days after receipt of the required notice from the payee in which to pay the proceeds due, or to respond by stating in writing a reasonable cause for nonpayment. © A payee has a cause of action for nonpayment of oil or gas proceeds or interest on those proceeds as required in Section 91.402 or 91.403 of this code in any court of competent jurisdiction in the county in which the oil or gas well is located.
§ 91.405. EXEMPTIONS. This subchapter does not apply to any royalties that are payable to: (1) the board of regents of The University of Texas System under a lease of land dedicated to the permanent university fund; or (2) the General Land Office as provided by Subchapter D, Chapter 52, of this code.
§ 91.406. ATTORNEY’S FEES AND MINIMUM AWARD. If a suit is filed to collect proceeds and interest under this subchapter, the court shall include in any final judgment in favor of the plaintiff an award of: (1) reasonable attorney’s fees; and (2) if the actual damages to the plaintiff are less than $200, an additional amount so that the total amount of damages equals $200.
Ann Whitchurch tks. for your response I think I will need a D.O. before I send certified letter for timely payment, first production report to rcc was in march I really think eight months is enough time for paper work to be concluded especially since Devon already has the information for royalty owners from the pooled unit that said lease has been held by.
Re: DCole surface rights on this well which is horizontal was acquired by Devon from someone who had bought the surface from my grandmother consequently I have no knowledge about those negotiations.
Three Reeves Co horizontals north of Pecos and south of Orla with IP in last two weeks for 24 hour period that will produce >$1M in oil a month. Good luck to those in area!
Production during 24 Test Period
Oil
BBLS LEASE NAME API No
463 ROBIN 8 389-33552
401 BIG CHIEF 389-33508
350 BIG CHIEF 389-33480
405 Average 24 hr test
Specifically - ROYALTY OWNER REQUESTS
Section 91.404(b)If a royalty owner notifies you in writing of failure to make timely payment, you must either make payment or respond in writing within 30 days of receipt of the notice…
•Additional requests sent by certified mail for information not
covered by Section 91.504 must be responded to within 30 days of
receipt of request.
D. Cole tks. for info, this lease was executed by my grandmother in the 50s held by production with a minimally producing gas well, the gas well was a pooled unit, devon drills an oil well on part of the pooled unit which is on the lease that was executed by grandmother this is an unpooled unit drilled in jan. 2013 first production reported march 2013, still have no division orders to date wanted to know if there is a time limit for division orders, have talked to head of D.O. on phone but no satisfaction and no D.O.
Interesting, but it is on the internet. You mean everything on the internet is not true? Thanks
Paul, thank you. I was told by a landman that BHP has a new well by Orla that IP’d at around 1,000 bopd, also.
May I ask where you found your info? I would dearly love to know how Shell’s well in 54/4 came out!
Stephen - Oil & Gas Completion Query on the RRC website. Choose Completions Query and enter date range, district and county.
Buzz, I checked on them and you are correct.
Paul-I’m on the road a couple of days and can’t check from my computer… but I believe if you check Abstract Numbers you’ll find the 2 Big Chief wells are ~25 miles S of Pecos. COG frequently gives diametrically opposite directions from the correct one. Later–Buzz
Louise, please “friend” me as I would like to contact you. May have some good info for our area.
Has anyone had any success in negotiating a minimum annual royalty, instead of trying to define “paying quantities” required to hold a lease? Also, anyone getting a higher royalty % after well has paid out?
craig,
we have one property in another county where we receive a 1/3 royalty but that was only after they drilled a well in nefarious circumstances and were awarded the 1/3 by a judge many years ago.
Being both an operator and a mineral owner, I will say that 1/4 is the best you will get but it doesn’t hurt to ask for the moon and negotiate the best lease you can get them to agree to. 1/4 is usually the maximum because it then leaves them with enough working interest that they can acquire investors, pay for their costs and make a profit. Sometimes you get inexperienced flippers who don’t care about some of the details and they will pay more for a lease, accept higher royalties and then they get stuck with the lease and you never get a well drilled. best to stay with known companies that have experience drilling the area and negotiate the best lease you can.
paying quantities is usually determined by market price and what it costs to keep the well operational. they will include both tangible and intangible costs.
Haven’t heard anything better than a flat quarter royalty.
Stephen, glad to see you are back. I friended you and haven’t heard from you. What is the name of the horizontal well south of Pecos and I will search too.
Thanks for all your help too.