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Frequently Asked Questions *
1. What are the different types of oil and gas interests?
Royalty Interest is the interest in production retained by the lessor in the royalty clause of an oil and gas lease. This is the mineral interest owner's compensation under the lease for production. This interest is free from operating costs, but can be subject to various taxes and post production expenses. This is also can be referred to as Landowner's Royalty or Lessor's Royalty.
Overriding Royalty Interest is a royalty interest carved out of the lessee's lease hold interest. As with the Royalty Interest, Overriding Royalty is most generally free from any operating costs, but can be subject to various taxes and post production expenses.
Working Interest is the right to the mineral interest granted by an oil and gas lease. The owners of this type of interest are the parties that operate the property and pay for the costs of drilling, completing and operating any wells. This can also be called Leasehold Interest or Operating Interest.
2. How is my interest in a well calculated?
Most generally, when a well is proposed to be drilled, Petroleum Development Corporation contacts an outside attorney to request a title opinion. An examination is made of the public records from the local courthouse pertaining to the lands included in the spacing unit for the well. Based on those documents, the attorney examines title and calculates interest based on the number of net mineral acres contributed by each party to the spacing unit and the royalty percentage as determined by the oil and gas lease covering the interest.
In some instances, title to a particular interest may be unclear or incomplete. In that case, curative documents may be requested from the apparent owner in order to "prove up" title. Some examples of curative documents are death certificates, probate documents, affidavits of heirship, etc. This process can take some time to complete.
3. What happens when a well starts producing?
When production is obtained from a well and a division order title opinion is received, the Division Order Department will prepare and send out division orders. A division order is a statement executed by all parties who claim an interest in the well stating how proceeds of production are to be distributed. The division order is a statement of the well location, the party's interest, address and tax identification number. Failure to provide a Tax Identification Number can result in federal tax being withheld from the revenue to be disbursed. The division order needs to be signed by the owner and returned to Petroleum Development Corporation so that proceeds can be distributed.
Please note that Petroleum Development Corporation does not distribute proceeds from all of the wells that we operate. In some instances, we market the oil and gas and then the purchasers of those products distribute the revenue that is generated.
4. What are the Petroleum Development Corporation payment schedules?
For production paid by Petroleum Development Corporation, payments will be sent out on a regular basis. Most royalty owners will receive a monthly check. Small amounts are accumulated and paid as stated in your division order, or at year-end.
5. What do I do if my check is lost, stolen or outdated?
You can contact us at (800)624-3821 and ask for the Revenue Distribution Clerk. We will check our bank records to see if the check has cleared. If the check has not cleared the bank, a replacement check can be issued after the 15th of the month following the issuance of the original check.
6. Why does my monthly payment sometimes vary?
Many factors can affect your payment. These can include, but are not limited to, market conditions, regulatory or contractual changes, diminished production, seasonal conditions and downtime.
7. Why does my payment differ from other members of my family?
This can occur when ownership between family members is not equal, because one party has not provided Petroleum Development Corporation with a Taxpayer Identification Number, or because individual family members may own interests in other properties.
8. What kind of statement will I receive at the end of the year?
Petroleum Development Corporation sends out IRS Form 1099 to interest owners receiving more than $10 and working interest owners receiving more than $600 at the end of the calendar year summarizing payments for the year. Every year the IRS compares the information you provided to them when applying for your social security number with the information that we provide to them when reporting your income. If the IRS finds a discrepancy, they will require Petroleum Development Corporation to contact you in order to resolve the error. Common causes of discrepancies include incorrect addresses, inverted numbers, name changes that were not reported to the IRS and the use of a spouse's social security number.
9. What do I do if my marital status or address changes?
Please notify Petroleum Development Corporation in writing when you change your address. Include your name, old address, new address, signature, and for verification, your owner number and social security number. It is helpful if you include your telephone number in case there is any question about the change. Send a copy of a marriage certificate or other documentation of name change to update your name in our records. This information should be sent to Petroleum Development Corporation, attn: Division Order Department, 1775 Sherman Street, Suite 3000, Denver, CO 80203.
10. What happens when I sell my interest or acquire an interest?
In order to transfer interest, Petroleum Development Corporation must be supplied with a properly executed and recorded transfer document such as a deed or assignment. The conveyance should be sent to Petroleum Development Corporation, attn: Division Order Department, 1775 Sherman Street, Suite 3000, Denver, CO 80203. Upon receipt of the proper documents, a division order will be sent to the new owner and the change will be made in our disbursement system.
11. What happens when an interest owner dies?
Please notify Petroleum Development Corporation in writing as soon as possible upon the death of an interest owner. As soon as reasonably possible after notification, the deceased owner's revenue will be held in suspense until the proper heirs can be determined. After notification, a package will be sent to you describing what must be provided to transfer the interest to the proper heirs. Please note that interests cannot be transferred until the correct documentation has been received.
12. What does it mean to have an interest "suspended"?
For your protection, payments are not made upon notification of a title dispute, the assignment of interest, notice of death, transfer of property, or in the event of no known address. Once all proper documentation has been received to resolve such issues, funds will be released and paid to the proper parties.
13. How can I contact Petroleum Development Corporation?
Questions regarding payment of royalties should be directed to our Royalty Owner Hotline at (888)860-5836. Please leave a detailed message along with your name, telephone number and best time to be reached. Your call will be returned by a member of our Division Order Department or Revenue Distribution Department as is appropriate.
Any correspondence should be mailed to:
Petroleum Development Corporation
Attn: Division Order Department
1775 Sherman Street, Suite 3000
Denver, CO 80203
* DISCLAIMER: Each royalty interest is governed solely by the language in the individual written agreement between PDC and the royalty owner. Nothing in this document will amend the language in your written agreement concerning royalties or grant any rights to royalty holders.
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