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Question
We have interest in property mineral rights and signed leases with an oil company. They have drilled a number of wells on that property and have been taking oil out from about June 2012. We have complied with every thing they have ask for to prove heir-ship but they still are holding our royalty in suspense. This has gone on for months and they keep coming up with all kinds of delays. Most recent reason for not paying is that they still need to contact more interest owners. How long, by law, can they hold our funds in Texas?

Answer
I believe Section 91.402(a) and (f) of the Texas Natural Resources Code states that once a well begins producing they have 120 days to begin paying you, and ongoing payments after that are due no later than 60 days after the end of the calendar month in which oil is sold, or in the case of gas, 90 days.

They apparently can suspend payments without paying interest in certain cases (barring lease language to the contrary) such as a title "cloud" on your ownership that needs "curing." In this case they should at least tell you WHAT needs curing so that you can go fix it. They can also suspend payments until they reach the state minimum for distribution; usually $25 to $100.

In the event interest is due (as it is in certain cases where your title is not the issue) I believe it's 2% above (and 4% in some cases) the rate charged on loans to depository institutions by the New York Federal Reserve Bank. Interest is basically due when title is clear but payment is late, or when they send you a division order to sign that does not comply with statutes (fairly common) and you therefore refuse to sign it.

You can read the statutes I referred to above here: http://www.tlma.org/pdf/news_requirements.pdf

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
www.mineralhub.com
The Mineral Hub  

Oil/Gas

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Frederick M. Scott

Expertise

Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.

Experience

I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written several articles which have appeared in various oil and gas industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and landwork over the past ten years, and also worked as a professional landman and lease buyer for a time. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

Organizations
National Association of Royalty Owners (NARO); American Association of Professional Landmen (AAPL)

Publications
National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Education/Credentials
Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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