Do You Have Suspended Royalties?

Imagine the responsibility and complexity of properly distributing millions of dollars in oil royalty payments to thousands of people on a routine basis. That is a regular task of oil and gas companies. It is no small feat, and it has to be done right. Further, imagine the consequences of paying the wrong people. That is the last thing an oil and gas company wants to do. Think about it, the time and expense of undoing mistakes is far costlier than getting it right the first time.

So, let us introduce the phrase "suspensed funds", also known as a suspense account, suspended royalty, or money in suspense. The phrase comes from the idea that a particular interest should be suspended (held from payment) for a specific reason. Common examples include a W-9 IRS tax withholding form that has not been signed and returned, a division order that has not been signed, a questionable mineral title, or an invalid mailing address.

Determining if You Have Royalties in Suspense

If you think you may have suspended funds held in your name, contact the operator (the oil company) and ask for the land department. Give them your name and reason for your call. They should be able to tell you whether you have money in suspense and why. In most cases, they can also explain what is needed to remedy the issue and release funds to you.

Millions of dollars sit in the coffers of America's oil companies, some of which there is little knowledge of whose it is. However, much of these suspended royalties are tagged to an individual, yet there is some (sometimes minor) detail that has not been handled, which keeps the money from being distributed.

Escheatment - Unclaimed Royalties Fall into the State's Hands

State statutes allow suspended royalty funds to be handed over to the state government after a prolonged period. In effect, the law allows oil companies to off-load the administration responsibility after roughly 3-10 years, depending on the state. At that point, the oil company transfers records and funds to the state and is relieved of ongoing administration. The article "Unclaimed Oil and Gas Royalty" discusses how individuals can recover royalties owed to them from state governments.