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Energy Industry (Oil & Gas)/Operator says there is a title problem and has royalty in suspense...Tarrant County

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Question
I purchased land 11 months ago from a bank 2 months after they traditionally(courthouse steps) foreclosed on it.  I sent the operator(XTO) a copy of the filed deed and signed the letter they sent me for the department that makes the royalty payments.  Every month they said, "it's just about ready". There are 8 producing gas wells that are 1-5 years old.  The previous owner had never paid a dime of city/county/school taxes on the wells, so I paid them due to High penalty/interest fees.  The last time I talked to XTO they said the account is still in suspense because there is a "title issue".  I asked them what is the title problem?  They said they are not allowed to tell me,  I said it is my property and I have a right to know what the title issue is.  She said it is with a Land Man and he is busy doing his Land man work and will get to my file when he has time.  This sounds like bull.

I have researched title and a Land Man friend researched deed records and we both see the same.  My Land friend says XTO is saying "title issue" because they can get away with not paying statutory interest later when they decide to start paying royalties.  XTO has not contacted me since telling me there is a title issue 4 months ago.  I sent everything they asked for within the first month of owning the property 11 months ago.

I believe I need to send a certified letter to force them to respond, and to request statutory interest at the highest amount.  Do I also call and request to speak to the Land Department Manager and tell them the scenario? In what order do I contact them?  thank you.

Answer
Hello Kerry. It's hard to say what the title problem is, but I think your plan sounds reasonable. I would try to contact the land department before I sent the demand letter. If the response is not satisfactory I would then send the letter. One thing you should be aware of is that you are not entitled to any royalty that is attributable to those periods of time before the purchase at foreclosure. For example, if the oil company had suspended royalty payments to the foreclosed tract prior to your purchase, those accrued but unpaid funds would not be transferred with the property. This doesn't answer why you haven't been paid for the last 11 months though. I don't have a clue about that!

Good luck Kerry.  I would be interested in hearing what the company has to say about the title issue. Let me know if you have any further questions.  

Energy Industry (Oil & Gas)

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David B. McCall

Expertise

Questions regarding oil and gas exploration and production, the operation and management of oil and gas producing properties, and questions related to mineral ownership, title problems, and oil and gas leases.

Experience

I am Board Certified in Oil, Gas and Mineral Law in the state of Texas. I have more than 37 years of experience in the industry as both an in house attorney for major oil companies and as a partner in oil and gas firms. I am also a mineral owner and receive royalties from oil and gas production. I have extensive title examination experience, and have represented clients in many administrative and court proceedings.

Organizations
State Bar of Texas, Texas Bar Foundation, and Austin Bar Foundation.

Publications
Various state bar seminars on Oil and Gas matters.

Education/Credentials
I have a business degree in marketing from McMurry University, 1971, and a JD degree from Texas Tech University in 1974, where I graduated 17th in my class. Board Certified in Oil, Gas and Mineral Law in 1986.

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