Owner decimal interests

Is there a way to figure out if the GC are paying us what we are due????  A well was split between 4 companies.  The main company sent the first DO and it came out to the correct # as per the formula.  Next thing we know we get 3 more DO s and they are paying as per "their" interest in the well. Is there a way to double check if we are being paid in full as per our interest in the unit???????? Anyone have a formula to use to figure this out for sure.  It should add up to the property interest but in our case it does not --- does that happen and are we being pd correctly??????

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Permalink Reply by Dexter Green on July 31, 2014 at 3:26pm

The math is actually straight-foward.  Find your total interest in the unit and then add up all of the division orders and see if it comes out.  Post you royalty percentage, how many acres of yours are in the unit, and the total unit size and I'll run the numbers for you.

Permalink Reply by beth hamm on August 6, 2014 at 1:51pm

35.85 in 610 with 2 companies 33.75% and 2 companies with 16.25

Permalink Reply by Zack Smith, Geologist/Appraiser on August 1, 2014 at 1:41am

The companies frequently subtract "marketing expenses" prior to reporting "their" interest. It is impossible to know if you're being paid fairly without an audit, which can be very complicated. Each company can also pay you drastically different prices for your gas/oil.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on August 1, 2014 at 3:08pm

The simple one company owning the well calculation would be:

Your # of acres / total acres in the unit x Royalty stated as a decimal fraction (0.20 for instance) would give you your total ownership decimal fraction.

For the 4 companies you mentioned I would multiply your total DO decimal fraction by each companies percent ownership percent (decimal fraction).

To check your work, add the 4 decimal fractions you come up with and you should have your total DO decimal fraction that you started with.

To determine if you are being paid fairly check the quarterly production report for your well at the agency in PA that keeps that data.

If you have NGLs and they aren't reported in your state, multiply the total number of Natural Gas MCF by 2 to get a rough estimate of the number of NGLs in gallons taken from the well.

Are you being paid fairly? No.

It's highly probable that anyone who could ensure you were paid fairly has their hands in the pot of gold being accumulated  by the O&Gs.

I seriously doubt that those who are selling their souls for the dollar, will be paid fairly by the O&Gs they have partnered with since O&Gs don't even pay their partners fairly. "It's a good business practice".

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