Revenue Claw Back

I own numerous gas wells in Haskell County, KS under Casillas Petroleum. I just received a settlement statement for April which shows where they have basically clawed back years of income or readjusted the income amount. Of course not in my favor. Some has details and some just is a lump sum amount but no details.

My question is is this legal and how many years can they go back. Is there a complaint process with the state I can go through.

I don’t know the law in Kansas off the top of my head, but Texas has a four year statute. Some states allow you go to back further if you can prove they “hid” the information so that you could not determine there was an issue.

If someone is making major adjustments that are not in your favor and are greater than four years, I would send them a certified letter asking them for additional information on those adjustments and under what law they are entitled to make adjustments for production that long ago. That’s a start anyways.

Texas statute limits the right of the mineral owner to question or challenge royalty payments to four years after payment. It does not limit the right of the oil company or payor to make corrections to four years. Oil companies routinely make adjustments for more than four years.

Regardless if companies make adjustments beyond 4 years, if the adjustments are what I deem significant and not in my favor, I am going to call them on it. If I’m limited to 4 years, I am going to expect reciprocity. Key factor is what the impact is to me. If it’s nominal, forget it and move on.

I’ve only had an issue with one operator who routinely does this, thankfully they sold my well to another operator a few years ago, and the new operator does not constantly adjust prior periods.

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