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Check your 1099s

Bob Skarphol, Tioga

With the advent of “Tax Season” comes the arrival of tax information. ND royalty owners should all receive their IRS 1099s relative to these royalties. If you receive royalties, please take time to try and understand these documents. Pay particular attention to the reference “other deductions” or “deductions” which will likely be identified on your 1099. It is true that companies may or may not be charging them but if they are, they should be identified on this document.

The companies that are taking these “deductions” are NOT required by law to take them. I repeat, they are NOT “required” to take them but have “chosen” to take them to increase their “bottom line” (profits) at the expense of the mineral owner.

For decades mineral owners signed leases with the intent that they would seek a small portion of the dollar value of the resource in return for not having to investment in the development. And for decades that was in fact the practice. Responsible corporate leadership that treated the mineral owner with respect. What a novel idea.

Beginning in the mid 2000s, the practices began to change, along with less respectable and responsible corporate leadership. The loyalty to the mineral owners that made it possible for the companies to benefit disappeared, and the loyalty switched to the corporate investor and the self-promotion of executive images. The cost to mineral owners has grown exponentially and needs to be addressed.

Williston Basin Royalty Owners Association (wbroa.com) is trying to address the problem but we need your help. Affecting change requires strength, in message and numbers of people willing to participate and speak up. Please consider joining and providing the strength of your voice to chorus of dissatisfied mineral owners.

The average deduction now being taken exceeds 10% of gross royalty, the typical lease has a minimum of 1/8th royalty, assume the price of oil is $50 per barrel and daily production is 1.52 million barrels per day. When you do the math, it translates into $346,750,000 of “other deductions” that the “new corporate leaders” believe is theirs rather than ours.

If you agree stay silent and hidden. If you believe it is your money, adjust your time and get involved. Talk to anyone who you believe may be able to help change this practice and effect change so that mineral owners receive what was expected when the leases were signed the handshakes took place.

You may hear that the courts have given them the authority, but that does not make it right, and courts can error as well as humans.

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