Title requirements for money being held in suspense

What responsibility does a producer have in contacting the royalty owner for money being held in suspense for title requirements? The money being held is from 7 wells in Reeves Co that started producing June 2021. Neither myself nor my other family members have ever been contacted about the title requirements. The producer of these 7 wells is also the producer of another well we are already being paid on in the same Section and Block, so they have all our contact information. We only found out about these wells from getting a Notice of appraised value from Reeves Co.

The Operating Company provides information about Wells to Reeves Co. So, if Reeves has sent you a notice that includes the new Wells, then the Operating Company knows everything they need to know. Contact the Operating Company and ask them if anything needs to be done. Probably nothing, unless someone has died or some other change in title has occurred. You may also want to see if the new Wells are listed on your check stubs.

Why do you think that the money being held in suspense for the 7 wells and not released for payment would be on my check stub, which they are not. Also the operator apparently doesn’t know everything they need to know if it is being tagged as needing title requirements. I’m waiting to find out what the issue is. But I still need an answer to my original question.

How do you know it’s being held in suspense for a title requirement, if you haven’t contacted the operator yet?

1 Like

I did contact the operator and that was what I was told but am waiting to hear back what the issue is with the title requirement. The question I’ve been trying to get an answer to is what responsibility does the operator have for contacting me that there is a title issue. It has been a year since the wells started producing and the operator has never contacted me. They have my contact information. If I hadn’t received the notice of appraised value and contacted them, I wonder how long they would hold my payments for. I just think they have some responsibility to contact me to get the issue resolved.

royalties escheat to the State, not adjudicate. So much for my Semester as an English Major…

Now you have me curious, too!

They’ve been paying you on some Wells in your Unit, but not all of them? I’ve been a Landman for more than 43 years and I’ve never heard of that one.

I do not, however, think they have any responsibility to contact you about these kinds of issues. There are just too many royalty owners and too many possible title issues out there for them to be able to justify the expense of keeping all the titles straight.

It may vary from state to state, but as I understand it in Texas a company can withhold your royalties for 7 years. They are then required to turn the royalties over the State Comptroller’s Office. The State Comptroller’s Office then holds them for 7 years and, if no one has contacted them and filed a claim for them, the royalties adjudicate to the State.

This does not effect title to your mineral or royalty interests, just the unclaimed funds.

Have you checked the Comptroller’s Unclaimed Properties Website?

https://claimittexas.org/

Be careful, it’s addictive.

I’d be interested to hear if @M_Barnes has any insight answering your question. I had a similar problem on a mineral interest in Texas where it’d been 2 years since first date of production, and the operator hadn’t distributed revenue yet. They claimed the title opinion wasn’t completed. Fortunately, I convinced them to pay me. It was quite the battle.

1 Like

If it were me, I would send a certified letter, return receipt and demand payment and interest. They are required to answer a certified letter. Ask if there are any curative issues that need to be fixed. Keep copies of everything! Sometimes, there is a bad address. Sometimes, they are just really behind, especially with COVID personnel struggles.

2 Likes

What would the interest rate be in the state of Texas? Is it a standard rate or a rate outlined in the lease?

Really, really low and tied to the bank rates if I remember correctly. It is part of the statute. One of the TX folks can probably quote it. Not outlined in the lease. OK has 12% which encourages timely payments.

1 Like

Does anyone know what the rate is for New Mexico for unpaid royalties? I’ve heard 6 months.

Debra: in Texas, the operator has no obligation to investigate or cure title issues. It is up to the mineral owner to maintain their title and cure any problems and insure they have a clear chain of title. There may have been a new title opinion done that flagged problems with your title. Since you have contacted the operator about this, they will be able to tell you what the issue is and then you can do what needs to be done to cure the problem.

Section 91.403 and 91.407(d) Late payment interest is due at a rate of 2 percentage points above rate charged on loans to depository institutions by New York Federal Reserve Bank when:

  • Payment is late and the title is clear
  • Payment is late, a division order is offered that does not comply with statutes, and the division order is not signed

Late payment Interest is due at a rate of 4 percentage points above the rate charged on loans to depository institutions by the New York Federal Reserve Bank when:

  • Payment is late and notice that you are the new payor has not been provided
1 Like

I am not exactly certain of the question, but if you are asking what interest rate the Oil and Gas Companies or the State of Texas pays or is burdened with for Oil and Gas Royalties held in suspense, from my knowledge it is Nada, Zero, None.

You are SOL on that issue.

Funny thing is, the O&G Companies hold all of the Suspended Royalties that they have (control of) in their General Accounts. And those accounts, I would imagine, probably Interest Bearing.

Interesting World we live in, isn’t it?

1 Like

Thank you for everyone’s input. I appreciate it.

I understand the operator has no obligation to cure title issues. But back in June 2021 when these 7 wells started producing, at that time does the operator have an obligation to contact me that I have money accruing in suspense because of title requirements and what the issue is? They already had my contact information.

BTW, the operator will likely provide you a copy of the actual requirements concerning your interest as was prepared by the examining title attorney. Request it. It is likely a simple issue to fix (hopefully) as you are already in pay with them on other lands/wells. Truly, Landman

It is very important for mineral owners in Texas to stay on the ball and on top of any pending payments. If you do not sign a Division Order, you do not get paid. Send that letter to find out why you are in suspense.

In OK, there is no requirement to sign the DO, so many folks ignore them. In OK, mineral owners also need to stay on top of their affairs because not getting the DO means they might be missing out on royalties that needed a simple title fix.

1 Like