Delinquent First Production Payment Lemon's Wells (Stone Energy) Wetzel County, WV
I like to work with folks, but Stone Energy is very casual about making payments. These Wells have been in production since August of 2013 - no Division Orders issued or payments made as of 9/4/2014. Below is the letter that was sent:
Roger Cutright
Head of Land Division
Stone Energy
Morgantown Office
1300 Fort Pierpont Drive, Suite 201
Morgantown, WV 26508
Dear Mr. Cutright,
This is to notify Stone Energy that they have failed to make timely payment on the Lemon’s Wells in Wetzel County (API #103-02710, #103-02711, #103-02712, and #103-02713). I consider this non-payment to be gross negligence, since these Wells have been in production since August of 2013 and there has been no Division Orders issued or payment made as of the date of this letter.
Sincerely
Cc:
Dave Welch, CEO Stone Energy Lafayette Office (Headquarters) 625 East Kaliste Saloom Rd. Lafayette, LA 70508
|
Patrick Morrisey Office of the WV Attorney General State Capital Complex Bldg. 1, Room E-26 Charleston, WV 25305 |
Rick Toothman, VP Stone Energy 1300 Fort Pierpont Drive, Suite 201 Morgantown, WV 26508
|
James A. Martin, Jr. Chief – Office of Oil and Gas Department of Environmental Protection 601 57th Street SE Charleston, WV 25304 |
Views: 3246
Replies to This Discussion
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Permalink Reply by Sterling Williams on
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Is this the proper way to go about getting royalties paid that are delinquent? I have a operator that owes back payment, but I havent been able to find anything in Ohio mineral code or revised code on the proper way to recoup owed moneys. Any help is greatly appreciated.
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Permalink Reply by James Foster on
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Civil court ... small claims if the amount is less than $3000. You need some evidence ... production records are online at ODNR. Division order and or Unitization order filed at court house should show your interest in unit and total acres in unit. You have your royalty in lease. If you have received a check and have your decimal interest you can verify that it's correct. Small claims court is inexpensive compared to an attorney and a civil trial but it might be enough to light a fire under someone's a$$ at the companies offices.
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Permalink Reply by Sterling Williams on
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It looks like that is what I will have to do James. This is in Washington County, what is the proper way to go about getting the unitization order or division order? We never received a check or anything. It is probably about $60K, but I want to make sure I have my ducks in a row before I go spending money on a Lawyer.
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Go to recorders office to get copy of Declaration of Pooled Unit. It will be on file there.
Go to ODNR and find well summary/well card and print that out. It will have production records which are reported to ODNR quarterly.
Take a copy of lease.
For $200 bucks you can spend an hour and get an attorney to verify your concerns.
How far are you from St. Clairsville? We use HHM and they now have an office in St. Clairsville. These are our business and personal attorneys as well, not just oil/gas attorneys.
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Permalink Reply by Sterling Williams on
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I am actually in Louisiana. I work for a mineral management company and one of our clients owns the property. Unfortunately, Washington County only has names and dates for their online documents, no images so I think we are going to have to get a someone up there to do a lot of the title evidence leg work. Thanks a bunch for the advice, Ohio is a very different animal that Louisiana haha.
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Sterling,
Washington county ohio recorders office is online including images. Go to uslandrecords.com
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Permalink Reply by John on
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depends on your lease sterling. My lease with ches reads as follows under delinquency of payment:
if royalty is not paid by the date due, lessor may give lessee written notice of nonpayment of royalty, by certified mail, return receipt requested, and if lessor's royalty is not paid on or before expiration of 45 days after lessee's receipt of such notice, interest shall commence accruing on the due date and be payable by lessee to lessor on the delinquent balance at the rate of 5 percent per annum above prime interest rate. However, lessee may avoid any interest obligation if prior to the expiration of such 45 lessor is furnished an attorney's written opinion citing a bona fide dispute or a good faith question of royalty entitlement (either to ownership or amount), Lessee pays to Lessor the undisputed portion and lessee pays the disputed royalty to an escrow account to be administered by a trustee agreed to by both parties or by the American arbitration association, if such trustee cannot be found.
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Permalink Reply by Sterling Williams on
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Unfortunately, there is no such language. The lease was on the property when it was bought and it is from the 60's ie: they basically just signed on the dotted line.
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Permalink Reply by Forrest on
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The main discussion point of this post is the length of time it takes from the first sale of production from a well until royalties are paid. It is not a question of if you will be paid, just a question of time. According to the WV DEP site these four wells produced the following in 2013:
Aug 2013 - 6,229 mcf & 310 b/oil
Sept 2013 - 44,395 mcf & 1,858 b/oil
Oct 2013 - 53,435 mcf & 3,558 b/oil
Nov 2013 152,511 mcf & 6,964 b/oil
Dec 2013 147,713 mcf & 4,649 b/oil
Probably around $400,000 in royalties in 2013 at 12.5%. Plus 8 months in 2014 that have not been paid.
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Permalink Reply by Sterling Williams on
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Running the numbers quickly, Im guessing that is in the neighborhood of $100,000-$150,000. Since you sent a letter, Im going to assume that you have already called them to try and get a response on why they havent paid. My recommendation would be to hound them on it. You would be surprised how many issues I have resolved by just being persistent enough that someone finally decides to fix what is wrong rather than ignore it.
Depending on the size of the company, you might try emailing them a copy of your certified letter, a lot of times operators will start working on it even before the letter gets to them if they know it is on the way and that you are serious about getting it resolved.
Keep us posted when you get a response, Im interested to hear what they say as to why it hasnt gone into pay status yet.
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