SALEM, Ohio — Interpreting royalty checks from oil and gas companies can be confusing. The information laid out on the check stubs isn’t always clear, if the information is there at all.
Ohio state Rep. Jack Cera heard that feedback from his constituents and others throughout the region for years. Cera, D-Bellaire, introduced legislation last year that would standardize the information sent out with royalty checks for landowners.
House Bill 55 would require 15 different items to be included on a statement with the royalty check. Right now, the Ohio Revised Code requires producers to report three things and only if the royalty owner requests that information.
Those three things are the volume of natural gas for which the royalty owner is being paid, the price per thousand cubic feet the producer received and the volume of natural gas that passed through the well’s meter.
Most oil and gas companies already report the required information automatically with the landowner’s monthly royalty checks.
Additionally, many producers voluntarily increased what they disclose on royalty check stubs, said Matt Hammond, president of the Ohio Oil and Gas Association, in a statement to Farm and Dairy.
“We have concerns about the state inserting itself into a contract between two private parties,” Hammond said.
Cera said he’s heard of at least one company making a deliberate effort to make its royalty checks more user-friendly.
Encino Energy began putting more information on royalty check stubs after it took over Chesapeake Energy’s Utica shale assets in Ohio in 2019. The company, though, faced blowback from landowners in Carroll and Columbiana counties, many of whom said they noticed issues with their royalty checks after Encino took over.
The bill would require basic information like the well name, well identification number, county in which the well is located and the beginning and end date of the payment period. It would also require more detailed information like severance taxes and deductions.
The Ohio chapter of the National Association of Royalty Owners supports the legislation, with some additions.
“This is a great start to helping royalty owners better understand the multitude of expenses being deducted from their income,” said Barry Browne, president of the Ohio NARO chapter.
Cera said this is the third time the bill has been introduced, starting back in 2011. It never gained enough steam to make it out of committee. It was sent to the Energy and Natural Resources committee. History seems to be repeating itself as no further committee hearings have been scheduled yet.
(Reporter Rachel Wagoner can be contacted at 800-837-3419 or rachel@farmanddairy.com.)
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