WILLISTON, N.D. -- Plans to develop a royalty owners groups are proceeding, says the group’s organizer Bob Skarphol, though he is asking members to be patient with slow progress at least for now.
Skarphol decided to explore interest in a royalty owner’s groups after several discussions with other frustrated royalty owners who also felt their questions were not being answered when it comes to deductions from their royalty checks. While there is a state royalty owners organization, Skarphol said it’s been ineffective on the issue at hand.
“I kind of got left with this task as the gentlemen I was working with has had some health issues and had to back away from it,” he said. “So I’ve had to assume all the responsibility with regard to it. So I am getting all the i’s dotted and t’s crossed, and looking at soliciting people to be members of a board with this organization.”
Once the framework is in place, Skarphol indicated he would become more assertive, as well as schedule another meeting. He added that he was pleased with the level of interest shown in the initial, organizational meeting in Williston.
“I didn’t know how many would show up,” he said. “I didn’t know if it would be five or 50. When as many showed up as did, it was very satisfying.”
The meeting, held earlier this month in the Williston City Commission meeting chambers, attracted dozens of frustrated royalty owners.
“Most of the frustrations that are out there on the part of royalty owners comes down to the fact that we need to be more assertive as a united group, to make the Legislature and the executive and judicial branches in North Dakota more aware of the fact that we don’t think the treatment of royalty owners is entirely appropriate,” he said.
Post-production deductions from royalty payments have increased substantially in the wake of the 2012 state Supreme Court decision, Bice vs. Petro Hunt, which said producers may deduct costs for making produced gas marketable.
In some cases, Skarphol said, companies are now deducting so many post-production charges that the balance owed on the gas is negative. That difference was then taken from what the company should have paid in oil royalties.
“When you look at a royalty statement and start seeing negative numbers, you start to wonder,” Skarphol said.
Questions about such deductions have largely gone unanswered, prompting some to file suit.
But Skarphol believes that will be less effective than working through the legislative process.
“I’ve had a few conversations with legislators about this,” Skarphol said. “It sounds to me like they are in some ways going to address the mineral owners royalty issues.”
Having a group to speak to the issues will be an important part of supporting lawmakers working on the issues, Skarphol said.