Second Check? Wierd sandwiched check?

Oil and Gas Leasing Help
#1

Hello all. Thank you in advance for reading! I own rights in the bakhen in Williams County N.D. I recieved my division order in early November and my ensuing first royalty check (approx $8,500) in late November as expected, but then things got a little wierd. I received a check in late December for $867!!! ????? A few questions if you don't mind...

1.) What was up with that??? I visited a tax professional who also deals with investments and is very steeped in oil drilling/mineral rights and he said that the second check would be smaller than the first, which is logical, but by $8,000!!??? Could that have been an adjustment of sorts? Meaning that they made a mistake on the first check and were just sending the reminents of it late?

2.) If not, is it likely that the small check was indeed my second royalty check??

3.) When should I expect my next check? Is January realistic? Can I expect it to be in the thousands for this one? Once again,

-Divsision order arrived early Nov

-$8,000 royalty arrived in late Nov

-Mysterious $800 arrived in late Dec

Any input is greatly appreciated. If you have read/answered thank you VERY much! This board is an excellent source of substanative information and I'm thrilled to have stumbled upon it.

Thanks,

Joey

#2

Joey:

Did the first and second check indicate time periods covered by these payments? Not knowing how many net mineral acres you have and the amount of production, etc., I really can't say. Was this a "confidential well" and the first check covered several months of production? Good luck in finalizing your answer as maybe someone on this board had the same situation occur and can shed some light on your situation.

#3

Charles,

Thank you very much for the response. The possibility of a confidential well is not something I thought about. I will get back to you on what I own and the production. I remember that the check said production started in April if that indicates anything. The main reason I am befuddled is that before the division order came Brigham offered me $60,000 to get rid of me, which I declined, which leads me to believe that they owe me more than that, or at least close to that in royalties. Unless the royalties come in a LOT of monthly installments over a LONG period of time, the $867 checks seem a bit small to me. Thanks for shedding light on some of the variables though.

#4

Dear Mr. Schwartz,

Doing some quick math. April through September production (7 months) divided into $8500 = $1213 per month on average. Taking into account monthly decline, appx $900 for November production sounds in the ballpark.

Looking at the production months reported should give you a more clear idea of monthly production.

A $60K buyout offer gives the operator 5 year payout (more or less) if there is only one well drilled.

Congratulations on the mailbox money.

#5

joey:

I agree with Mr. Cotten in regards to editing the production months. If you do the math, what Mr. Cotten is saying makes sense but again I don't know how many acres we are talking about and production figures. Good luck in solving your question.

#6

Wow. Thank you both very much. 5 years just seemed like a looong time. I thought (for no necessary reason) that they would be condensed into a couple years with larger checks. Question answered! Thanks.

#7

Hello again,

I was just wondering if weather had any impact on production and therefore the check amount? Will the amount increase as we get into warmer weather? Thanks a lot!

Buddy Cotten said:

Dear Mr. Schwartz,

Doing some quick math. April through September production (7 months) divided into $8500 = $1213 per month on average. Taking into account monthly decline, appx $900 for November production sounds in the ballpark.

Looking at the production months reported should give you a more clear idea of monthly production.

A $60K buyout offer gives the operator 5 year payout (more or less) if there is only one well drilled.

Congratulations on the mailbox money.

Best,

Buddy Cotten

www.cottenoilproperties.com

#8

Joseph:

I wouldn't think that weather would play that great of factor in the $/month on the well. Warmer weather is not too far ahead so I guess that you will soon find out. Good luck on your well!

joseph schwartz said:

Hello again,

I was just wondering if weather had any impact on production and therefore the check amount? Will the amount increase as we get into warmer weather? Thanks a lot!

Buddy Cotten said:

Dear Mr. Schwartz,

Doing some quick math. April through September production (7 months) divided into $8500 = $1213 per month on average. Taking into account monthly decline, appx $900 for November production sounds in the ballpark.

Looking at the production months reported should give you a more clear idea of monthly production.

A $60K buyout offer gives the operator 5 year payout (more or less) if there is only one well drilled.

Congratulations on the mailbox money.

Best,

Buddy Cotten

www.cottenoilproperties.com

#9