Replies to This Discussion

Permalink Reply by Henry on May 26, 2012 at 14:21

Let's do some math.....

I'll assume your well averages 100,000 mcf per month.  At $2.50 for your gas, that comes to $250k/month revenue.  On a per-acre basis, that comes to $390 (assuming 640 acres).  Multiply that by 0.25 for your royalty share, and I get $97 per acre, per month.  Something doesn't sound right to me.

Permalink Reply by g p tindall on May 30, 2012 at 2:18

thanks for the reply.

additionally, we have 79 acres of 643 acre unit. 79 divided by 643 is .1228.

.1228 times 250k/month revenue is $30,700.00 per month.

we have more than one owner of the 79 acre tract but that is just another division.

so how would they arrive at such low figures? we are averaging less than $160.00 per month total.

in the division order, we have 643.4 unit acres, BPO net ac is .196370, and BPO unit int is .00007600.

i cant seem to arrive at these figures.

we are section 17-13n-13w

 

Permalink Reply by Larry G Smith P.E. on May 30, 2012 at 3:13

Using the Natural Gas Royalty estamator . Using an average of 100,000mcf/month, divided the 100,000 by 30 days to get an average production per day, at $2.50 per mcf. I come up with a royalty for your 79 acrea of $7,678.00/ Now depending on the number of people in the 79 acres, you will have to divide that number into the $7,678 to get each persons share.  If you say the average check is $160 per month, then that would mean  $7,678.00/ $160.00= approx. 48 share holders in your 79 acrea.

Permalink Reply by g p tindall on May 30, 2012 at 3:51

thank you for your reply

 

we have only five in our 79 acres and the total amount before dividing shares is $160.00 per month

Permalink Reply by Larry G Smith P.E. on May 30, 2012 at 3:55

Then you have  serious problem from the looks of it. Something is wrong with the numbers.

 

Permalink Reply by g p tindall on May 30, 2012 at 4:11

i agree. what do you suggest we do?

Permalink Reply by Larry G Smith P.E. on May 30, 2012 at 4:24

 Who do you have your property leased too and have you read your lease and understand what it say's? If every thing is in order, I would suggest that you talk to an attorney and get him to send a letter to that company demanding an explanation of why you are only receiving a very small check.

Permalink Reply by HBP on May 30, 2012 at 5:41

Just focusing on the R.I.

If you have 5 shares in the 79 acres, then that's 15.8 net acres to each (if you had 100% of the minerals).  The R.I. for that at 643 unit acres and .25 is .006143.  (if you meant 5 acres out of the 79, then the R.I. is .001944)

Then look on each check stub and see what R.I. or interest they have been paying you specifically at.  Also, the D.O. used the phrase "BPO"?  That is usually a "before payout" term, and still seems off in the first place if you own a 1/5 in 79 acres.

But in general, if you own the amount you stated, I would agree with all others that have posted that it is low and you may have a curative issue or otherwise that the Lessee is needing to clarify.  You can write your Lessee, certified with Return Receipt and make demand under Mineral Code article 31:137, et seq.  But also add in there to notify you in their response of any royalties in suspense in your tract and to support their suspense status with excerpts from the unit title opinion. 

Best to pay an attorney who is familiar with this process a small fee to draft and send it, because if they do not respond properly, then you you have other rights under the code that should be exercised and may require litigation.  Good luck and feel free to friend me if I can be of assistance.

Permalink Reply by Henry on May 30, 2012 at 13:48

I would suggest that before you launch in with an attorney, you contact the company yourself.  Attorneys are expensive.  If it is one of the larger companies, they have phone banks that you can call.  It will require some persistence, but you will eventually get a person to talk to who might be able to answer your questions.  Many people on this site have done this, and pointed out errors, and gotten them corrected without having to pay an attorney.  My personal opinion is that it is best to try to deal with it yourself, and see if it is something simple that can be easily corrected. 

Permalink Reply by Larry G Smith P.E. on May 30, 2012 at 14:00

Henry, I agree with you 100%, if he calls enough he will get a person that will talk to him.  I know it took me a few months but I did get their attention and got the problem straightened out.

Permalink Reply by g p tindall on June 1, 2012 at 2:02

thanks so much for all the help.

 

Permalink Reply by Larry G Smith P.E. on May 26, 2012 at 15:33

How many of you share in this 79 acres of land also do each of you receive a royalty check?

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