Getting an Oil and Gas Company to Change Who They Pay

Written by about Ownership and Transfers on October 2, 2014

I bought property with an existing lease on it. What do I do? How do I get an oil and gas company to update their records and add me as the current owner?

Most oil and gas leases (even really old ones) contain some variation of this phrase: “No change of ownership shall be binding on the Lessee until it is duly notified.” This is legalese for: the oil and gas company will keep paying the old owner until the new owner speaks up and shows ownership.

When you think about it, this makes sense: oil and gas companies cannot be responsible for watching every courthouse in the state to see when a property changes hands. Instead they put the burden on the Lessor (landowner/mineral owner) to let them know when they should make a change to their payment structure.

Here’s what you need to do:
1) Find the name of the oil and gas company by looking at the sign listed on the well itself, or by searching for your property on the Ohio Department of Natural Resources website (Here).
2) Do a quick internet search to track down their address.
3) Write them a letter telling them that you recently purchased property and would like them to update their records.
4) Include a copy of your deed. They need this to ensure that you got the mineral rights when you bought the property.
5) Include an IRS form W-9 with your social security number. You can print one Here. Royalty income is taxable. If you fail to give your SSN the company will withhold taxes from your royalty checks.
6) Make sure to include your contact information, including a phone number.
7) Keep a copy of everything you send.

Depending on the size of the company, you may also want to follow up with a phone call approximately two weeks after your letter is mailed. Generally speaking, the bigger the company, the slower they will be to respond. If you are able to get someone on the phone, make sure to ask when you should receive a check and what the amount of the check should be. You may also want to know how many months of production it represents.
Once you start receiving your royalty checks, make sure to keep the statements that come with them in a secure location. We suggest keeping those statements for at least three years. You may also want to put in a call to your accountant and let him/her know that you have a new source of income.

If you have questions about your royalty statement (especially if you feel that the company is making improper deductions from your checks), please give us a call.

About Molly Phillips

MOLLY PHILLIPS earned her law degree from University of Akron School of Law. Her primary practice consists of reviewing oil and gas related contracts. Molly also litigates oil and gas law cases. Past litigation topics include dormant minerals law and lease breaking.