Lexington, KY asked in Energy, Oil and Gas for Oklahoma

Q: It has been 9 months since first production. How do I get the oil company, Red Wolf, to pay the 12% late fee?

Do they pay 12% for the nine months or only the 3 overdue months? They were trying to use an old title that was not current. I consider this their responsibility to have the correct title as it is easily available. Is this correct? This is for 6 new wells. I am still waiting on my first check.

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2 Lawyer Answers
Chaille Walraven
Chaille Walraven
Answered
  • Energy, Oil & Gas Law Lawyer
  • Clinton, OK
  • Licensed in Oklahoma

A: In Oklahoma, operators are required to remit payment within six months from the date of the first sale of production. Failure to do so can trigger late interest payments pursuant to 52 Okla. Stat. § 570.10. You are correct that if you have marketable title, you are entitled to 12% interest on late payments under Section D. However, if you do not have marketable title (whether easily corrected or not) you are only entitled to the prime interest rate as reported in the Wall Street Journal for late payments accrued after November 1, 2018. From your question, it appears the key issue is whether you hold marketable title as that will impact how much interest you are owed.

Richard Winblad
Richard Winblad
PREMIUM
Answered
  • Edmond, OK
  • Licensed in Oklahoma

A: In your question you asked:

"I consider this their responsibility to have the correct title as it is easily available. Is this correct?"

The person who checks title is usually referred to as a "division order analyst". The analyst's job is to determine whether title is sufficient to pay royalties. If not they will usually outline title requirements. If the property was inherited then an Oklahoma probate is usually required even if the estate was probated in another state. Often a shortened probate procedure will be needed.

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