Why haven’t I been paid my oil and gas royalties?
There are a few common scenarios regarding the timing of royalty payments to consider depending on if you are still waiting on your first royalty payment or if there has been a gap or a delay in oil and gas payments
I haven’t been paid royalties by my oil company at all yet
Once production is flowing from a well, it can still take several months for a royalty owner to receive their first payment. Oil companies want to make sure they have an economically viable producing well before they take the time to figure out the exact ownership percentages to payout. The good news is that states enforce interest payments if these payments aren’t made within a certain timeline.
Questions about a timeline for a specific state? Contact us for help.
I haven’t been paid royalties in a while by my oil company
Changes in the production output of an oil and gas well will affect the payment you receive. Oil and gas wells usually decline in production over time as oil and gas is extracted and the pressure in the surrounding rock decreases. Unless new wells are drilled, you should generally expect payments to decrease through time. Oil and gas commodities and their trading value will also affect the price you receive. After the well has been producing for a while, normal maintenance is to be expected which can create short term decreases or gaps in payments.
If there’s been a gap in payments with your oil and gas company, there are few things you can do.
Track your assets to understand if your well is still producing or if the well has been shut-in for any reason. MineralAnswers offers a free service to track your wells and to be notified when new production is reported. Production gets reported ahead of revenue checks so getting notified on production can help you stay aware of future revenue changes or even gaps in payments.
Understand your state’s aggregate pay laws. Aggregate pay laws allow oil companies to withhold royalty payments until certain dollar thresholds are met. These vary by state, usually ranging from $25 to $100. These are in place to cut down on administrative costs for minimal payment amounts. The next section outlines aggregate pay laws for some key states.
Aggregate pay laws by state
Texas: Payments less than $100 may be accrued before disbursement. However, payment is required at least yearly when proceeds equal $10 or more. On the written request of the owner, the oil company will be required to pay the owner if the payment due is more than $25.
Oklahoma: Payments less than $100 may be accrued before disbursement. However, payment is required at least yearly when proceeds equal $10 or more. On the written request of the owner, the oil company will be required to pay the owner if the payment due is more than $25. Also before the oil company withholds payments greater than $25, they must notify the owner of the ability to request payments above $25.
North Dakota: The operator can aggregate payments up to 6 months if they are less than $50
Questions about a different state? Contact us and we’ll try and dig it up.