Uderstanding your royalty statements, empowering landowners against royalty theft or mistakes

We are chugging along towards completion of the well that includes a portion of our property. The last word is completion of the connecting pipeline is in June and it looks like they are well moving to that goal. They have been working 24 hours a day setting up the pad for production and what I assume is the flowback portion of the procedure.

My attention will soon turn towards a very daunting task of verifying my royalty statements against lease terms and fair market pricing.

I have been told and very much believe that the statements will be nearly impossible to read and understand. Fair enough, but, I am not easily daunted by complications from difficult situations. I fully intend to hire an accounting firm specializing in oil and gas royalties to verify everything and then I will hold the producer accountable for any discrepancies.

I am tired of hearing about landowners being abused.

This is a serious matter, folks who have never had money think money solves problems but it doesn't, it creates a whole new set of complications. And so it is with your royalties.

This site could do a tremendous service to its participants if instead of bombarding us with buyers of mineral rights and royalties it would offer solutions to understanding your royalty statements and aiding in the educating of landowners.

This is my new endeavor, soon enough we will begin to receive royalties and I fully intend to stick around, sharing information with others, learning from some and helping others, extracting the falsehoods and emphasizing the truths.

So, does anyone have any useful information for us on how they started down the path of deciphering royalty statements ? My first guess is the statements are overloaded with numbers that don't correspond to other numbers, confusing and complicating matters needlessly.

I appreciate anyone trying to help.

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Permalink Reply by INVICTUS on March 25, 2016 at 2:05am

I have an audit clause and the right to sue (not arbitrate). The ability to look back beyond the audit period is extended in cases where suits for fraud and other certain legal actions are initiated (Per O/G attorneys).

There are always timeline limitations in the legal world whereby the aggrieved are expected to act within the statutory timeframe, else lose their opportunity for any redress of these grievances.

I'm told the cashing of the check CAN be an argument the O/G company can and will make, the Judge and its temperament will be the decider of course, but the argument is considered weak.

However when monthly checks are quite large, one cashes the checks and sets aside for all taxes, and a legal fund.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on March 25, 2016 at 4:01am

David,

      If your royalty statement shows no deductions, then your producer at a minimum has conducted Mail Fraud since we all know the producers are taking out post production costs.

If you have NGLs that leave the state without payment of a royalty, this is a form of Interstate Commerce Fraud, probably by another name since there have been some changes in the Interstate Commerce laws.

There are plenty of laws being broken that will allow you to recover your losses.

A contract , even if written by O&G companies can't bind you to accept their theft.

How about all of those landowners who were told if you didn't list all the well products on your lease, you don't get paid for the products taken.

I believe that a contract/lease must list the products that can be taken by the oil and gas companies. Those products not listed in the lease belong to the landowner. Taking those products that are not listed is a lease violation, as well as theft for non payment. Everyone in the US is familiar with the statement: "If you didn't put it in writing, then you don't get it". That goes for every person and corporation, even if they are unethical oil & gas corporations.

Permalink Reply by Mark Hrutkay on March 25, 2016 at 5:34am

Ron:

Comments....   Anything across state lines like mailing a check is MAIL FRAUD ... (forget that Interstate commerce stuff), that where MF comes from....   How ever MF is a CRIMINAL not a CIVIL action...  You can't sue them for MF...

In a criminal case, the GOVT can allege MF and they can argue MISTAKE, or lack of meeting of the minds on the calculations...

Same in civil case for BEACH OF CONTRACT (IE them not paying proper royalties)... OG Company will argue YOU DONT UNDERSTAND how we calculate the royalty....

"A contract , even if written by O&G companies can't bind you to accept their theft."   ... WELL SAID...

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on March 25, 2016 at 3:45am

In Ohio we have a Class Action Arbitration with Chesapeake Operating while going after Chesapeake Energy with the Hope Fellowship Church vs Chesapeake Energy Complaint.

Thieves always leave a door open for you to take action if you look closely enough.

Permalink Reply by Undecided About Oil on December 18, 2017 at 3:39am

Any news?

Permalink Reply by Mark Hrutkay on March 25, 2016 at 5:27am

Short comments...

1.   Right to audit.... Probably in the lease.... HOWEVER you can easily get a court order for the gas co to produce records..

2.   Cashing check basically never relieves them of the obligation to pay.  Auto insurance companies used to have checks that had a release on the back ... You endorsed it and released your rights...  Didn't hold up in court...

3.  There could well be an "only arbritration" clause in a the lease

5.  IRS...  Legal fees are a tax deductible expense... So it offsets your gas income, not a problem there.  The problem is spending a lot on lawyers and not getting it back...

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on March 24, 2016 at 9:34am

David,

      You need to rethink not cashing your checks. You will be stolen from.

I just got 50 cents an acre for Buck Well 1H.

I hope Chesapeake's ceo and board of directors are getting a good laugh today. I know what tomorrow will bring for them, legally of course, and not the civil type. The CRIMINAL type.

I have the evidence and any one in Ohio who refuses to act on it will be added to the list of Co-conspirators that are helping Chesapeake take Billions from Ohio.

Just yesterday a Jefferson County landowner was told that the pipelines on his land are carrying oil. The truth is, if you look at pipeline maps, the pipelines are carrying NGLs to the Ohio river for loading in trains and barges. Even the pipeline employees have been coached not to talk about the NGLs in the pipelines since no one is being paid for them.

Please remember that the Oil is in stored in the tanks at each pad and is hauled away by a tanker truck, it doesn't need or use a pipeline to be under production. If you don't have a Product Code 4 on your Chesapeake royalty statement, you are being shorted NGLs that are leaving your well by pipeline.

The Citizens of Ohio have missed out on royalties and severance taxes on NGLs. Each gallon of NGLs contains: Propane, Butane, Pentane (natural gasoline), Ethan, and Methane (natural gas). These are all valuable products on the open market when sold at a fair market rate at the endpoint where used. All of the ALOV and SURE leases require a royalty at the endpoint purchase. Holy Cow, someone owes us a bundle of money!!!

A real state government would have changed the Revised Code prior to 2010 to include a Severance Tax on NGLs. But that would require documentation of volumes taken which would lead to royalty issues/theft questions, since royalties have never been paid on NGLs.

Consider NGLs the gift given to Chesapeake for drilling in our state, if not by the landowners then who is responsible? I think I know.

Permalink Reply by David Allen Lilly on March 25, 2016 at 12:00am

I have reconsidered the cashing of the checks and addressed it above. Many times I have been given bad information by folks in the field. Maybe it is on purpose but maybe they just don't know any better.

We all should have educated ourselves enough to know what is in the pipelines.

My lease not only requires the royalty for NGL's but it mentions them all by specific name. We'll see if they are stolen, I don't doubt that they are if the producer think he can get away with it.

I have many friends here receiving royalties, even some of the less friendly leases are still receiving $400-$500 per acre per month.

We need to stick together, share information and not just wander away from the site when the checks start. We also need to be accurate with information.

Are low royalty payments the result of wells being nearly shut in ?

I don't doubt that every perceived advantage is taken by the producers.  I am eager to find out for myself.

Permalink Reply by Fast on March 24, 2016 at 12:33pm
You have to be a member of Mensa to figure out a royalty statement. They give it ... They take it... They round their numbers up and round yours down. It's 29 pages long. They don't even know where they are at and how they come to the check amount. A normal person trying to read this is not in their league. You need an auditor who's been to several rodeos to know how to lasso the company. Trust me when I tell you ... You can't make this $hit up!!! It's the real deal.
Permalink Reply by David Allen Lilly on March 25, 2016 at 12:03am

I know that you are telling the truth about the statements but I intend fully to spend however much time is necessary to learn how to read them and understand them, and how to deduce any errors that short my royalty payment.

I have already decided absolutely to hire an accountant to audit my statements for me, even as I learn to understand them.

Permalink Reply by G.H. on March 23, 2016 at 11:34am

May want to look into National Association of Royalty Owners.

Permalink Reply by David Allen Lilly on March 23, 2016 at 11:59pm

I just did, I was specifically looking for information about how to decipher royalty statements and how to protect ones self from theft or mistakes, but I found nothing. Even the message boards were years old with nothing current.

I will email them and ask for the specific information I am looking for.

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