Oil/Gas/How to tell if we have a fixed NPRI or a floating npri
QUESTION: Marsha. My question is about revoking division orders. We are investigating if DEVON Energy has been paying the wrong type of interest they say they are paying Royalty interest and I found papers that states it should have been non-participating royalty interest. My question should I write them a letter on revoking the division order I just signed? Thank for any help.
ANSWER: Before you consider revoking your division order, please give me the three most important pieces of information I need to know before I can advise you about your question:
1. If your land is pooled into a pooled unit, is there any wellbore perforation directly under your land, or within 100 feet of any boundary of your land?
You will need to look at an "as-drilled" plat map (should be on file with the Texas Railroad Commission if your land is in Texas), find your land inside the boundaries of the unit, and see if the wellbore goes into, or through, your land and there is at least ONE wellbore perforation (called a take-point, or "T.P." on the map).
2. Did you, or anyone who owned your NPRI interest before you did but AFTER the lease was signed, sign a Ratification of Oil and Gas Lease, or Ratification of Pooling, or Ratification of Pooled Unit, or any document similarly named?
3. What is the amount of NPRI you own in the land, regardless of whether there is a lease and regardless of whether there is an oil and gas lease covering it? A fraction, percentage or decimal is needed here.
If your answer "Yes" to #1 but "No" to #2 (and you know your answer is accurate), I will advise you according to what decimal is in your division order compared to what it should be.
If your answer to #1 is "No" to #1 but "Yes" to #2, I must advise you a different way.
If your answer to #1 is "No" to #1 and "No" to #2, you should never have a received a division order at all, because you are not entitled to receive any form of payments from the sale of production from the well.
I need the answers to the questions before I can know what the correct answer to your question will be. Please send the follow-up question as "private" to make certain no other eyes see the information. And I need to know for sure we are talking about Texas lands here. Thanks, James.
---------- FOLLOW-UP ----------
QUESTION: Sorry for being late on answering. I have been investigating to answer your questions. #1 yes the RRC has a oil well on the survey #2 No we are still searching but no one can find were a consent form to pool was ever signed. Both of the tracks of land are in Wise county Texas.
ANSWER: Thanks for the follow-up information, James. With your additional information in mind, let's get back to your original question about revoking your division orders with Devon. If the only reason you are considering doing this is because you own a non-participating royalty interest and they have been paying you using the code "RI", I need to tell you three things:
1. A non-participating royalty interest is the same thing as a royalty interest, except its owner is not allowed to sign a lease or take part in any bonus payment or rental payments. An NPRI interest does not "participate" in lease negotiations or lease signing or rental payments.
2. Not all accounting databases allow for an "NPRI" code (any code using 4 letters) on check details. So RI has to be used. Or, in the case of Devon, Devon uses a database software that will allow using "NPRI" on the checks, but has a business policy of using RI at the discretion of the division order analyst who sets up the record. The reason for that is beyond me, but the division order analysts there are not required to code an account as "NPRI" and may instead code it as "RI".
3. A RI and NPRI are both paid exactly the same way--in other words, you are receiving exactly the same amount of money you would receive if the check detail had "NPRI" in it instead of "RI".
Unless you know for certain that the wellbore of the well you are being paid for is physically located directly beneath the land you own the NPRI in, you should not revoke the division order. If you can find out for certain that the wellbore IS located directly under your land, AND you can find out for certain that no one who owned this NPRI before you did ever signed a lease ratification or a pooling agreement ratification, you should contact Devon and demand a NEW division order crediting you with your full NPRI decimal of royalty out of 100% of what is coming out of the well. No reduction for pooling is allowed under that circumstance. For example, if the original deed conveying or reserving the NPRI states "1/16" as the amount of royalty, and you later inherited 1/4 of the 1/16, then your NPRI share is 1/4 x 1/16, or 1/64. You would be entitled to be paid 1/64 of 100% of the production coming out of the well, no reduction allowed for the ratio between the acres in your land inside the unit divided by the total number of acres in the unit. You need to apply your own true ownership fraction or decimal in your land to know what you would be entitled to be paid IF both of the requirements above are met (well directly on your land and no signed ratification).
Also, be aware I have been told by attorneys in the past that any oil and gas company is required by Texas law to go back and pay only a total of 48 months worth of unpaid royalties from the date they receive a certified letter demanding payment of unpaid royalties. Then, of course, they must pay the full, correct amount each month going forward, once they verify that the demand in the letter is correct.
---------- FOLLOW-UP ----------
QUESTION: I have sent Devon a paper showing the NPRI and what fractional interest the family has. My question is how can I tell if the interest is fixed or floating? The judgment has two terms I am looking at 1.they are to recover in equal shares the hereinafter provide undivided fractional interest in royalties 2 statement provide, a royalty of not less than 1/8.I believe it is fixed what is you view on this. Thank you for your help.
James, I was contacted by Devon Energy this morning concerning your questions and my answers to them, that they found on the internet. It is up to you, but if you would like to speak with someone at Devon with the authority to resolve your issues quickly and effectively, please call Chris Anderson at (405) 552-4563. Chris is the Division Order Supervisor at Devon and will be able to answer this question using information directly related to your producing property and your interest. I recommend that you give Chris a call, or email him at email@example.com.