Making Sense of Statements
Freeholders have many concerns with royalty statements.
Firstly, some freehold mineral owners receive only a check with no corresponding royalty statement which would provide the basis for the amount paid.
Secondly, although freehold lease agreements uniformly require the payment of royalties for one month’s sales of leased substances on or before a certain date in a subsequent month, many industry operators simply ignore this obligation and pay when it is convenient for them.
Thirdly, and most critically, although virtually all oil and gas industry reporting has been standardized, there is no standard form for freehold royalty statements and most freehold mineral owners do not fully understand the statements provided to them.
Why? Because unlike Crown leases and the leases used by the major corporations that own freehold mineral rights, the lease agreements presented to freehold mineral owners, whether they be leases used prior to the introduction of C.A.P.L. leases in 1988 or C.A.P.L. 88, 91, 99 or 2014 lease forms, these lease agreements contain no reporting requirements whatsoever.
If you are approached to lease, FHOA can help you to modify the lease agreement presented to you to require appropriate royalty statements and, if you already have a lease, FHOA can help you to understand any royalty statements being provided to you.