Owners FAQ

Owner Relations

What are oil and gas leases?

An oil and gas lease is a written agreement in which a mineral owner (the “lessor”) allows another person or company (the “lessee”) to explore for, drill, and produce oil and/or gas on lands specified in the lease for a certain period of time in exchange for the payment of royalties.

In addition, the lease provides the legal description of the leased premises, the amount of royalty to be paid, usually described as a fraction, e.g. 1/8 or one-eighth, the length of the lease often referred to as the primary term, typically for a specific number of years and the rights and obligations of the parties (Lessor and Lessee).

What are royalties?

Royalties are the mineral owner’s proportionate share of production as reserved in an oil and gas lease. The royalty amount is usually expressed as a fraction of the total amount of hydrocarbons produced from the leased premises or the proceeds attributable to such production.

When are royalties paid?

Fifth Creek’s payments are made in accordance with applicable State Statute. After the payment for initial production is made, Fifth Creek pays for oil and gas production two months after production occurs. Fifth Creek’s minimum payment threshold is $25.00. If payment is less than $25.00, the funds or royalties will be made when the accumulated funds amount to $100 or at the end of the calendar year, whichever comes first. Owners can expect payment monthly as long as the well is producing, except as provided above.

What is a division order?

After a well begins producing oil and/or gas, Fifth Creek issues a division order document to each interest owner that identifies the well, describes the spacing unit, the interest owner’s remittance addresses we have on file, and the interest owner’s decimal interest in the well. The interest owner is asked to sign and return the Division Order. This information is used to remit proceeds to the interest owner.

What is a transfer order?

A Transfer order is a document that Fifth Creek uses to evidence the transfer of ownership from one interest owner to another.

How do I transfer an interest in my property?

Ownership may be transferred due to various situations. If the property is transferred due to a sale of the interest, Fifth Creek must receive a recorded copy of the transfer document, such as an assignment or deed. If the interest is transferred due to bankruptcy, Fifth Creek requires copies of the court order appointing the Trustee, recorded conveyances and the court order confirming any sales. If an Owner dies, please see detailed information for ‘Change of Ownership’.

What happens if I change my address?

You must notify Fifth Creek in writing when you change your address. Please use the form provided for ‘Change of Address’ and return to Fifth Creek via email mward@fifthcreekenergy.com or by mail at 5251 DTC Parkway, Suite 420, Greenwood Village, Colorado 80111.

What happens if my marital status changes?

If your name changes because of marriage, divorce, etc., Fifth Creek will require a copy of the divorce decree and copies of the courts decree (Settlement Agreement) recorded or filed in the county where the minerals or land are held.

What happens if one company merges with another?

If the change is due to a merger, please furnish a recorded copy (in the county where the minerals are located) evidencing the merger and surviving entity.

What happens if the owner’s interest is in Guardianship status?

If an owner is declared incompetent please furnish Letters of Guardianship filed through the court. If the owner is a minor and reaches legal age, we need a certified copy of the minor’s birth certificate to verify age.

What type of annual statements will I receive?

Interest owners receiving more than $10 in royalties or more than $600 in rentals annually will receive IRS Form 1099. This summarizes your total payments and tax withholdings for the previous year.

What happens if the interest owner dies?

Upon receipt of notification of the death of an interest owner, Fifth Creek personnel will place the interest in suspense pending proper documentation is received showing the distribution of the estate. Once proper documentation is received and reviewed, the interest will be transferred to the current parties as evidenced by the documents provided. The royalties will be released from suspense and payment to the current interest owners will be placed in pay status. See Ownership Changes for required documents.

When and why are royalty payments suspended?

Payments may be ‘held in suspense’ or suspended due to questions regarding your account. Some examples why your account may be suspended:

  • Lack of current address
  • During the transfer of property
  • When record title is inadequately documented creating a ‘cloud’ on the title or if the title ownership is disputed
  • When we do not have a TIN (taxpayer/social security number) on file, as evidenced by IRS Form W-9 or W-8.

What is Form W-8?

This form is required for all non-US persons. Please contact a qualified tax professional for guidance regarding this form. Fifth Creek Energy is unable to provide tax advice.

What is Form W-9?

Federal law requires that individuals and partnerships provide a certified Taxpayer Identification Number (TIN) for the interest owner account. For individual interest owners, your TIN is your Social Security Number. Other entities should provide Employer Identification Numbers. If the appropriate TIN is not received, Fifth Creek is required to withhold 28% from your payment for federal income taxes.

How is my ownership calculated?

The interest owner’s decimal interest in a well is calculated by taking the net acres owned in the spacing unit divided by the total acres in the spacing unit times the royalty or override rate associated with the interest. The well interest is then multiplied by the dollar amount of total production Fifth Creek receives from the purchaser. Changing market conditions may cause price fluctuations. Operational or mechanical problems or routine maintenance may temporarily impact production, causing downtime. Any of these conditions may increase or decrease the amounts paid to interest owners of interests in oil or natural gas wells. If production volumes and/or prices fluctuate, the amount of your check will be affected accordingly.

What do I do when my royalty check is lost, stolen or becomes out of date?

Email mward@fifthcreekenergy.com to stop payment if your check is lost or stolen. Please have the following information ready when you call:

  • Lack of current address
  • During the transfer of property
  • When record title is inadequately documented creating a ‘cloud’ on the title or if the title ownership is disputed
  • When we do not have a TIN (taxpayer/social security number) on file, as evidenced by IRS Form W-9 or W-8.

Fifth Creek will place a stop payment on your check and issue a replacement within 10 business days.
If your check is outdated, void the check, and send it back to 5251 DTC Parkway, Suite 420, Greenwood Village, Colorado 80111 with a written request for a new check.

Where can I research unclaimed funds?

Each state makes an effort to locate rightful interest owners of production revenues through a single organization, holding the funds until the owner is found. To locate and collect unclaimed funds, please visit the National Association of Unclaimed Property Administrators’ (NAUPA) website at www.unclaimed.org.

 

Ownership Changes – Required Documents

 

Change Required Document
Power of Attorney addition or change Copy of Power of Attorney, or copy of document effecting the change in current status.
Name change for a company, individual, or other entity When an individual’s name changes because of marriage, divorce, etc. please furnish the marriage certificate, death certificate, or other document effecting the name change. When a company has a name change, please provide a recorded copy of the Certificate of Name Change. If the change is due to a merger, please furnish a recorded copy of the merger recorded in the county where the minerals are affected. IRS Form W-9 is required.
Name change due to marriage, divorce or other Marriage Certificate, Divorce Decree or other document such as the Settlement Agreement, effecting the change.
Address change A written request with the owner number, last four digits of the tax identification number, address, owner signature and date.
Bank change or direct deposit request to auto payment If payment is mailed to a bank or lockbox, send the request in writing with the same information as a request for address change. For direct deposit.
Purchase or sale of interest Copy of conveyance as recorded in the county or counties in which the property is located. IRS Form W-9 is required.
Guardianships If an owner is declared incompetent please furnish Letters of Guardianship filed in the court. When a minor reaches legal age a copy of the minor’s birth certificate is required along with IRS Form W-9.
Ownership is transferred to or from a trust Copy of the trust agreement, or at a minimum, the pages addressing the creation of the trust, identification of the trustee and/or successor trustee, the powers afforded the trustee and a copy of the conveyance as recorded in the county or counties where the property is located. IRS Form W-9.
Trustee change Documents evidencing the change and the appointing the new trustee.
Death of joint tenant Death certificate of joint tenant.
Death of owner – a will was probated Copy of each of the following documents: Certified copy of Death Certificate, copy of Will, Application for Probate, Order Admitting Will to Probate, Letter Testamentary, Final Court Decree distributing the assets and closing administration, copies of any appropriate conveyances. If probate has been admitted in a state other than where the property is located, a copy of the ancillary probate recorded in the county or counties in which the property is located. New Owners will be required to complete IRS Form W-9.
Death of owner – no will or will was not being probated Copy of one or more of the following documents: Certified copy of Death Certificate, Letters of Administration, Order Determining Heirship and Distribution; notarized copy of the Affidavit of Heirship as recorded in the county or counties in which the property is located. Other documents may be required after review. New Owners will be required to complete IRS Form W-9.