Who is liable for incorrect royalty payments?

I bought land in PA years ago and have documentation that our lawyer sent title transfer information to Chesepeake.  Our land was a subdivision of property with a 100 acre oil and gas lease.  In 2013 the other owner of the remaining acres were informed that they were in a production unit, our land physically was not.   At the time I was unaware of PA rule of Apportionment.  When I finally figured out that we have rights to the royalties being produced from the 100 acre gas lease I contacted Chesepeake and the other oil companies. All of the companies said that they had no records of our ownership rights to the lease??  Currently I am in the process of updating all of the companies records.  

Anybody know who is responsible for payment of the incorrect royalties?  Chesepeake brushed me off and stated it wasn't their fault, they didn't have the deed.  Is it the other property owner since they signed a division order that wasn't correct?  

Any direction would be helpful.

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Permalink Reply by Gringo on June 25, 2015 at 2:06pm

Did your lawyer send the transfer letter certified, return receipt? If yes its simple they are responsible to catch you up. If not it will be messy although this should have been caught when they did the final search when they finalized the unit interest owner and division orders.CHK will recoup the money from the other owner from future payments. DO NOT SIGN A STANDARD COMPANY DIVISION ORDER, most have language to the effect you are agreeing to their title work and will be responsible for repaying all payments if you are EVER found not to the true interest owner and holding the company harmless.

Permalink Reply by Who knew that? on June 25, 2015 at 4:17pm
That's what I have heard also. Which section of the company do I contact? Division orders, revenue? None of these departments seem to know what is occurring in other departments.
Permalink Reply by Jesse V. on June 26, 2015 at 2:00am

I've never heard of this law. It's odd that property not in unit could receive royalties from the property it was severed from. Sounds like a bad and lazy law to me. 

Permalink Reply by J W Newman on June 26, 2015 at 8:28am
Agree, sounds like bad law or a lazy lawyer, the oil company cannot keep up with changes in the title to property on a day in day out basis for all its royalty owners, thus the necessity that new owners have to provide formal notice of the change of ownership via certified mail to the Payor/producer/purchaser.
Permalink Reply by Who knew that? on June 26, 2015 at 9:46am
Sounds more like a lazy company. Our land and title was on the books for 3 years before the unit was established. Chesepeake missed us during their title search. Both Chesapeake and anadarko received a certified letter back in 2009 about title change.
Permalink Reply by Dexter Green on June 26, 2015 at 2:18pm

Who was paid the royalty that you should have received?  If it was the other landowner then you may need to sue them for unjust enrichment.

Permalink Reply by J W Newman on June 26, 2015 at 10:07am
Check ur lease's requirement to protect your lands from drainage from an offset producing well? Many leases have a "drainage" protection clause? Other times our smart arrogant lawyers demand no pooling clauses in their preferred lease forms. It's not always the oil companies fault!
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on June 26, 2015 at 2:54pm

Whoknewthat?

     Most leases have a paragraph on how to transfer the lease to the new owners name.

I went through this on a house with 2 acres I purchased that was leased to CHK. The lease will tell you where to send the required information and the details about "Certified Mail, Return Receipt Requested".

My lawyer repeated the process a month later giving my wrong address so I knew someone else was "Helping Me" make the transfer.

Permalink Reply by Gringo on June 27, 2015 at 11:50am

Send certified / return receipt Notification of Default as described in your lease. It will get fixed you just need to know how to rattle the cage. Apportionment is PA state law and they must follow it. I have 2 leases under which I am being paid by Apportion. 1 needed a letter of default to motivate the company.

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