Since July 2019 our vouchers have changed. What used to be described as "deduct codes" for gas were 1) processing, 2) gathering, and 3) compression. These were then all expenses that came off the total gross sales (now called "sales value") for the owner. Now these three codes have been combined into two 1)PRA (processing) and 2) Compression-gathering. These are listed in a column labeled "Downstream Pricing Adjustments" and are NOT figured into the "sales value" or ones gross sales.
Can someone explain this? I've talked to the oil company and am not getting satisfactory answers so thought someone might be able to enlighten me.
During the interim following the 2017 legislative session the Oil and Gas Division of the North Dakota Industrial Commission promulgated additional rules relative to royalty owner statements. The intent was purported to be that royalty owners should be given simpler, better, and more useful information so their royalty statements could be more easily understood. The implementation date for the rules changes was intentionally delayed so the 2019 legislative session "could have input" into any suggested changes to the rules or statutes.
The implementation date set by the NDIC was July 1, 2019. The 2019 legislative session did not take action relative to the rules and therefore the new rules became effective on July 1, 2019
As your question indicates, the result was to again delay and distort by the industry actions. Your frustrations are exactly why an active outspoken royalty owners association is critical to change. Very few legislators have a familiarity with oil and gas royalty statements and do not understand why it is important to the state budget.
I firmly believe that is the reason for WBROA but it will take a concerted group effort. Educating and creating the awareness needed is a monumental task. I can show what is happening to my family but I do not have the ability to explain what is transpiring in all of the various environments.
I also think it is incumbent that the Legislature become involved in designing and requiring a specific format for all royalty statements. But for that to happen, we will have to help them understand what will and will not be acceptable. The industry will obviously oppose change simply because it is would likely be counter to their attempts to mask what is actually happening.
So now the 1099 does not match the totals of the vouchers gross and deducts. What they have done is add the total price adjustments to the income and to the deducts. I'm still trying to find out from them how that is possible.
Can you tell me more about "downstream pricing adjustments" and if they are really income and a deduction?
Ive decided to make this easier to comprehend.
1. Your operator has a secret agreement AND PARTNERSHIP with the gathering pipeline serving the wells you have your interests in, and that PARTNERSHIP RETURNS these deductions taken, back to your operator, but NOT BACK TO YOU. You were intentionally deceived and intentionally EXCLUDED even though you paid INTO the very same partnership your operator belongs to, or the PARTNERSHIP gas agreement he enjoys.
2. Your operator also enjoys a swap of "units" (a Unit is ONE MCF of gas severed, and all gas amounts accruing and they further ENJOY being converted into permanent UNITS or "shares" of the permanent pipeline PARTNERSHIP dividends, BUT YOU ARE NOT.
Summary; The lease NEVER EVER disclosed these MLP benefits that negatively effect your royalties and you have been intentionally EXCLUDED from these benefits by your operator who ENJOYS these benefits you paid for.. .....but are NOT ENJOYING.
I have to laugh out loud.......because.....the operators are NOT complaining about these deductions negatively effecting them, because they cant. Because they are ENJOYING these deductions being returned BACK to them. This is known as a "kickback" and kickbacks are illegal.