Altering Production Numbers After 2 Years??

I'm curious why an energy company would alter recorded production volumes  2 years after the oil and gas was produced. 

Based on review of several landowner royalty statements, this seems to be common practice.  Here's an example:

Well "A" produces 2000 Barrels of Oil in June of 2013.  The energy company pays an 18% royalty to "Mr. Landowner" based on 2000 Barrels and reports 2000 Barrels of production volume to the state as required.  All is well - everyone is happy.

In July of 2014, the energy company alters the production volume reported to the state, changing it to 1500 Barrels and deducts previously paid royalties from Mr. Landowner on his next check.

Later that year, the energy company changes their production numbers again, this time indicating that the production volume was 1800 Barrels.  They credit Mr. Landowner with the difference on his next check. 

A year later, in August of 2015, over two years after the product originally came out of the ground, production volume is once again altered, showing that the volume produced was 1650 Barrels. Mr. Landowner again sees a loss of royalty revenue on his statement.

If production is measured at the wellhead, how can the production volume change after it is measured, documented, and recorded?  Can anyone explain to me why this happens?

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Permalink Reply by bo boboski on October 21, 2015 at 10:26am

Dam good question. I will  be interested to see what the answer is.

Mike MurphyPermalink Reply by Mike Murphy on October 21, 2015 at 10:45am

sounds like theft to me ......the number recorded in the beginning should be the true number .....who ever heard of an oil company paying royalties on oil it has not sold..........if I was the landowner I contact the oil buyer and request there purchasing records for the well for the time that is being readjusted by the producer.......they have records showing every load of oil  they bought from that well and the amount that was paid to the producer I also contact the dept of natural resources and ask them to explain how the data first reported could be changed several times ..........there are answers out there you just have to hunt them down

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on October 21, 2015 at 1:32pm

With no state employee checking the well meters, the O&G company reports what they want using the Honor System. Apparently Ohio employees trust O&G companies more than Ohio landowners.

I'm sure an ODNR employee, for instance the Chief, approves any changes requested while shrugging his shoulders saying, so you made a mistake or two or three. No one cares but the landowners.

Meanwhile the O&G company bends their Ethics Policy in order to save the company using Landowner royalties. Chesapeake did it, why can't we?

Mike is right, it's all related to theft from the landowners.

Permalink Reply by st. croix on October 24, 2015 at 1:28pm
Ron I've contacted the Ohio attorney general and they do not care and also the Monroe county auditor and they know they aren't reporting the true numbers but aren't allowed to measure it themselves. It's so obvious that we are dealing with truly evil people.
Permalink Reply by OSU Mik on October 23, 2015 at 7:58am

Alright, my post has been viewed 303 times, and still no-one can offer an explanation? Although I appreciate that some of you view this as "theft" from the landowner, I'm looking for actual facts...an explanation of how or why this happens. Is there anyone out there who is knowledgeable about the process companies use to measure, document, and record production?

Mike MurphyPermalink Reply by Mike Murphy on October 23, 2015 at 10:41am

sounds like you better contact the production company and ask them about how they do business....HAVE U DONE THAT???

I would think they produce the oil ....when they get a tank full they call the oil buyer .....the oil buyer comes and hauls the load away and at the end of the month the oil buyer pays the production company '''''then the production company pays the royalty owner their percentage.....DO U THINK THERE IS SOME MAGICAL WAY THEY DO BUSINESS.....this oil companies at this time with the market the way it is are trying every trick in the book to find ways to screw the landowner.......then for the landowner to get any thing they are owed they have to file a lawsuit and go to court .....the producers are betting on them not spending the money to sue them .......like I said contact the oil buyer and request their records of purchases made from that well ....I am sure they didn't pay for oil they didn't buy  

Permalink Reply by Thomas Rockwell on October 23, 2015 at 12:56pm

It no doubt varies from producer to producer.  In our case (Oxford and then later Eclipse) when the tank is full an oil company out of Zanesville picks up the load and then sends out checks according to everyone's percentage in the well.  This includes the percentage for Eclipse.  Admittedly, this is a low producing Ohio Shale well, so it could be no one really cares about the numbers.  However, I have assumed that Eclipse takes its production numbers from the company purchasing the oil at the well head.

Permalink Reply by Hopeful on October 24, 2015 at 3:04am

Id' say call the operator and ask them.

Permalink Reply by st. croix on October 24, 2015 at 1:21pm
The fox is in charge of the hen house!!! Statoil told us that they can charge us what they want
Permalink Reply by RAYMOND bAUMAN on October 27, 2015 at 3:18pm
First we have to know if the # you teported are production from the whole unit or just the owners interest in the production unit. If the 2000 bbls was a 50 acres in a 100 acre unit and then a title opion say he only owns 40 acres then the bbs atributed to his part oftje unit could be reduced then after finding where heaquired 5 more acres the allocated production would increase. Thisis one way youcan adjust royalty payments for varying toyalty percentage
Mike MurphyPermalink Reply by Mike Murphy on October 28, 2015 at 4:04am

RAY they changed the total barrels produced they never changed the royalty percentage so your theory is out the window if they produced 2000 bbls they cant change volume of production because of royalty percentage......all title searches are completed long before a well is drilled there would be no reason to research a title after a drilling unit has been established that happened way back at lease signing time and the drilling unit was established before the well was drilled

Permalink Reply by colt on October 29, 2015 at 12:31pm
Not true Mike they do extensive title search before division orders r sent out

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