Several oil and gas companies operating in the area have entered into joint operating and partnership agreements, which typically result in landowners receiving separate royalty payments from separate oil and gas operators for the same interest. The most common such arrangement in our area has been the partnership that exists between SWN and Equinor.
The arrangement actually has its origin in deals entered between Chesapeake and Equinor before Chesapeake sold its West Virginia assets. In the deal, both companies own a percentage of the production from certain wells and they share in the expenses for those operations. SWN has continued and modified the deal after it took over Chesapeake’s assets. Unfortunately, we have received several calls that demonstrate SWN and Equinor are not always on the same page when it comes to royalty payments.
As the operation has been explained to us, SWN oversees the actual operation of the wells and reports the volume of production to Equinor. SWN and Equinor are supposed to allocate and pay royalties and costs according to the arrangement for the particular production unit at issue. On more than one occasion, however, landowners have learned through SWN they are being paid incorrectly. In many situations SWN has started to withhold royalty payments from its royalty owners because of alleged problems with the agreement with Equinor. We have seen situations where SWN has alleged it has overpaid and Equinor has underpaid. SWN has asserted in those situations that Equinor must correct and pay the royalty owner unpaid amounts which will correct the fact that SWN has withheld new payments.
Unfortunately, SWN and Equinor never seem to agree. In almost every situation in which SWN has asserted Equinor owes payments, Equinor has, at least initially, not acknowledged their obligation. In one situation, the back and forth reached the point that SWN ultimately admitted it had made a mistake and agreed Equinor did not owe payments and that SWN has, in fact, improperly withheld royalty payments.
If you are a royalty owner receiving checks from Equinor and SWN for the same royalty interest, or perhaps if you are only receiving checks from SWN, you should consider investigating those royalty payments to determine if you are being paid correctly.
The companies could be in conflict with one another. Attorneys like Bordas & Bordas and companies like Bordas Mineral Management can help you dig through the mess and learn whether you are being paid correctly. Please don’t hesitate to give us a call to review your royalties and confirm your situation.