How do you know if an oil and gas operator is being honest about a well being in pay status after penalty is paid for not participating in your working interest portion? How can you double check this? Especially when you had no idea about the interest at the time the wells were drilled.
You can request a payout statement from the Operator and you can hire an accountant to perform an audit. If you know of other owners who are in risk penalty status, you could possibly share the cost of the audit with them.
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You should post the State and the Operator for better replies to your situation. Statutory requirements vary by State.
Located in New Mexico
Do you happen to know how much these audits generally cost?
Cost would depend on the depth of the audit - cursory look vs reviewing the JIB summaries vs analyzing and reconciling the invoices - times the hourly fee of your expert (maybe $300-$1,000). It would be expensive and not financially worthwhile unless you have a sizeable revenue interest in the well. Moreover, you should also review the future JIB statements that you will be paying for your WI. Oil companies have experienced in-house petroleum engineers and analysts who do this on a regular basis for their non-op working interests. Small individual WI owners generally just accept the data as the costs would wipe out their revenues.
It seems that small working interest owners are just made to accept whatever they are given with no regard for what is fair, legal or ethical. That are at the mercy of the operator.
This is a serious business and each owner is responsible for keeping their own good records. Larger non-operating WI frequently spend their own time and money auditing the well financial records. You can ask for access to the detailed records, but if you have no expertise or experience to analyze, then you need to hire your own experts. This is not unethical or unfair. Think if it this way. If you buy a rental house and are not skilled in carpentry and plumbing to make your own repairs, then you have to hire experts to do this for you. This is why most small mineral owner lease their minerals instead of participating in the well.