Royalty Payments - Re-assignment of land to BLM

From Feb. 2014 to Nov. 2015 I consistently received royalty payments without question. I did not receive payments from Dec. 2015 to Jan. 2016 and was able to confirm that was due to deduction of ad valorem taxes. Then I received payment in Feb. and March 2016. I have seven active wells related to my lease and division orders specifying the net acres, royalty rate, and unit interest rate. A couple of weeks ago I received a new division order related to an original one that I signed in Feb 2014. It shows a lower net acres resulting in a lower unit interest rate.

In a phone call to Chesapeake Energy, was told that tract related to the location of this well had been reassigned to BLM retroactively to the original date in 2014. Was also told the lower unit rate would be retroactively calculated which results in a several thousand dollar deficit and I would not receive royalty payments for any of my other wells until this deficit was fully recovered. I haven't signed the new division order yet, but it doesn't seem to matter since I have not received a royalty payment in April.

I'm posting this discussion because I would like to know if anyone else has had this type of thing happen. Also, does anyone know if it's legal to just reassign land on a retroactive basis?

It just seems like, short of major expenses for audits or legal action, mineral owners don't have much control over this.

Any comments, advice?



In my decades of experience, I find it highly unlikely that the original Division Order Title Opinion missed the USA ownership in Converse County, WY. That's not to say it can't happen but if your future royalty income is significant, you should seriously consider contacting a mineral attorney with BLM experience before approving a new division order. The fact that Chesapeake is in financial difficulties nationally is another reason to get an outside opinion.

Let me know if you need a legal reference. I know a great one in Portland.