Question about Royalty payments

Question about Royalty payments.  John Q has 20 acres in a well unit with 3 producing wells. His lease is with Acme oil Co. 20% gross. The wells were drilled by Roadrunner Energy. The unit is 400 acres ,mostly leased by Roadrunner,but John Q 's 20 acres was included.  Does John get his royalty checks from Acme,or RR ?  If from Acme, Do they get paid from RR ,then forward it to John ? Do they do this free,or do they get paid extra from RR ? I'm sure this happens ,since every producer probably don't have 100% of their unit acreage under lease. I just don't know how it works,and no one I've asked knows either.

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Permalink Reply by bo boboski on April 16, 2016 at 3:32am

evidently,those who know the answer,havent visited here yet today. lol.

Permalink Reply by Pam on April 16, 2016 at 4:10am
If I'm understanding your question correctly, I can tell you how it's worked for us. Our lease is with Eclipse, but part of our acreage is included in a producing well which is owned by Ascent. We receive our royalty checks directly from Ascent, even though the lease we signed is with Eclipse. I'm not sure if that's exactly what you're asking, but if it is, I hope that helps.
Permalink Reply by Fast on April 16, 2016 at 10:37am
We are in more than one unit. One is solely eclipse and the other is a joint venture, however, the check is submitted by eclipse bc they are the operator of the wells. So with that said ..you could be paid by one or several ... Depending on the terms.
Permalink Reply by KAS on April 16, 2016 at 4:22am

As usual with OG, there is no one answer.  It depends on different factors. We leased with Gulfport but are in a well drilled by Rice.  Originally Rice was sending out the payments,  but this changed and we get checks from both Rice and Gulfport.  This may be different because of their agreement to share acreage- They are coowners of our well with Rice owning around 61% and  Gulfport 39%.  

Permalink Reply by bo boboski on April 16, 2016 at 7:21am

Ok. So evidently, the two companies involved must have their own agreement between themselves. and even tho you only get the % you leased for, they may split it up according to their agreement.

Permalink Reply by evan on April 16, 2016 at 10:36am
A friend has a lease with Eclipse but is in a Gulfport unit and drilled. He receives his checks from Eclipse , another friend is leased by Gulfport and is in Eclipse unit , he receives his checks from Eclipse. So it sounds like it depends on the situation , and I don't know what that is
Permalink Reply by bo boboski on April 16, 2016 at 2:47pm

Thx for responses. Looks like there is no cut&dried answer. Could get checks from either,or from both it seems.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on April 16, 2016 at 1:29pm

Complicated initial question to be sure.

Permalink Reply by Bluflame on April 17, 2016 at 1:01am

Bo,

  I am leased with CHK. They executed a JV with GPOR to include ~100 of my acres into a ~600 acre GPOR drilling unit. GPOR drilled three wells and has dependably sent monthly royalty payments ever since based on the CHK lease. There have been a few issues with lease terms that GPOR promptly remedied to my satisfaction.

  Considering the problems I've read about on GMS concerning CHK royalty payments,  I thank my lucky stars every day that my checks come from GPOR.

BluFlame

Permalink Reply by bo boboski on April 17, 2016 at 9:38am

I bet GPOR is also sending a % to CHK on your 100 acres. CHK signed you and gave you a signing bonus.  I'm sure they would be wanting something in return.

Permalink Reply by Bluflame on April 17, 2016 at 1:52pm
No question. It is a JV, and I assume CHK shares revenue based on their % share of the drilling unit minus my royalty and some operator fee to GPOR. I don't have any insider info, but that sort of arrangement seems logical.
Permalink Reply by Joseph-Ohio on April 18, 2016 at 5:25am

Glad to read you're having no issues.

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