11/13/2018 T ips to Be tte r Co mmunic a te with Mine ra l Owne rs De nve r Asso c ia tio n o f Divisio n Orde r Ana lysts Ho lida y L unc he o n No ve mb e r 12, 2018 Ro b Pre ntic e Co lo ra do NARO Pre side nt My Ba c kg ro und Se c o nd g e ne ra tio n in the o il pa tc h Co lo ra do ra ise d 18 ye a rs e xpe rie nc e Wo rke d o n pro je c ts in a ll we ste rn sta te s Wo rke d o n pro je c ts in o ve r 30 c o untrie s wo rldwide Curre ntly c o nsulting with a firm c a lle d T urre tt L ive in Bo ulde r 1
11/13/2018 Ab o ut NARO NARO – Wha t is it? NARO – Na tio na l Asso c ia tio n o f Ro ya lty Owne rs E sta b lishe d in 1980 – 38 ye a rs o f suc c e ss 501(c )6 e duc a tio n a nd a dvo c a c y o rg a niza tio n NARO is vo lunte e r le d 2
11/13/2018 NARO – Missio n Sta te me nt T he missio n o f NARO is to e nc o ura g e a nd pro mo te e xplo ra tio n a nd pro duc tio n o f mine ra ls in the Unite d Sta te s while pre se rving , pro te c ting , a dva nc ing a nd re pre se nting the inte re sts a nd rig hts o f mine ra l a nd ro ya lty o wne rs thro ug h e duc a tio n, a dvo c a c y a nd a ssista nc e to o ur me mb e rs, to NARO c ha pte r o rg a niza tio ns, to g o ve rnme nt b o die s, a nd to the pub lic . NARO - Cha rte re d Cha pte rs 1. NARO-T e xa s 2. OK -NARO 3. NARO-Ro c kie s 4. NARO-Arka nsa s 5. NARO- Appa la c hia 6. NARO-Pe nnsylva nia 7. NARO-Ne w Yo rk 8. NARO-L o uisia na 9. NARO-Ca lifo rnia 10. NARO-No rth Da ko ta 11. NARO - Co lo ra do 3
11/13/2018 Mine ra l Owne rship 8.5 millio n mine ra l o wne rs Mine ra l o wne rship 69% Priva te c itize ns, sta te s, a nd lo c a l g o ve rnme nts 31% F e de ra l Go ve rnme nt NARO Me mb e rship 1/ 3 Re pub lic a n, 1/ 3 De mo c ra t, 1/ 3 I nde pe nde nt T he a ve ra g e NARO me mb e r is o ve r 60 ye a rs o ld, wido we d, a nd re c e ive s le ss tha n $500 in mo nthly ro ya ltie s a s a supple me nt to the ir so c ia l se c urity re tire me nt inc o me . F a rme rs, ra nc he rs, fa mily trusts, wido ws, c ha rita b le o rg s. c hurc he s, ho spita ls, unive rsitie s, e tc . 4
11/13/2018 Wha t NARO Do e s E duc a tio n Ho ld to wn ha ll me e ting s to e duc a te mine ra l o wne rs a b o ut c urre nt e ve nts T ra in mine ra l o wne rs ho w to ma na g e the ir mine ra ls Ne two rking Po lic y Co unte r ha lf-truths a nd lie s put fo rth b y a nti-o il a nd g a s pro po ne nts with fa c tua l b e ne fits o f e ne rg y de ve lo pme nt I nse rt the vo ic e o f mine ra l o wne rs in the me dia thro ug ho ut Co lo ra do a nd b e yo nd Stro ng input o n b ill ma king pro c e ss a nd le g isla tive se ssio ns T e stify a t the Sta te Re g ula to ry He a ring s T ra in mine ra l o wne rs to b e c o me sto ryte lle rs a b o ut the b e ne fits o f the o il a nd g a s industry Gro w NARO's me mb e rship to inc lude mo re de fe nde rs o f industry o n ha nd a c ro ss the sta te fo r future b a ttle s NARO E duc a tio n 5
11/13/2018 Wha t We T e a c h Mine ra l Owne rs Mine ra l Ma na g e me nt 101 is ta ug ht a t a lmo st e ve ry a nnua l e ve nt 1 ho ur c o urse Co ve rs the b a sic s CMM (Ce rtifie d Mine ra l Ma na g e r) 8 ho ur c o urse T wo c o urse line s Asso c ia te re q uire s 20 e duc a tio n c re dits Pro fe ssio na l re q uire s 50 e duc a tio n c re dits T hre e pro c to re d e xa ms 10 Dutie s o f a Mine ra l Owne r 1) KNOW WHAT YOU OWN! 2) K no w wha t infor mation yo u ne e d a nd whe re to g e t it. 3) K no w wha t is going on in yo ur a re a o f inte re st. 4) K no w wha t the futur e impac t the sma ll print in the o il a nd g a s le a se / divisio n o rde r will ha ve o n yo ur ro ya lty pa yme nt. 5) K no w who has your le ase , yo ur we ll, yo ur pro duc tio n. 6) K no w what que stions to ask , a nd to who m to a sk the m. 7) K no w your limits . 8) K e e p c opie s/ or iginals o f e ve rything a nd o rg a nize it. 9) K no w tha t yo u must r e main vigilant a nd DO so me thing . 10) PL AN . 6
11/13/2018 4 Ma jo r Mine ra l Owne r E ve nts 1) Owne rship 2) L e a sing 3) Divisio n Orde rs 4) T he Che c k R Divisio n Orde rs A Divisio n Orde r is….. I ssue d b y the c o mpa ny a fte r pro duc tio n is e sta b lishe d. Sta te s the de c ima l inte re st o n whic h yo u will b e pa id. I s the link to info rma tio n o n yo ur c he c k stub . I s NOT re c o rde d a t the c o unty c o urtho use . 7
11/13/2018 Divisio n Orde rs A Divisio n Orde r is….. a n instrume nt whic h se ts fo rth the pro po rtio na l o wne rship in pro duc e d hydro c a rb o ns, inc luding c rude o il, na tura l g a s, a nd NGL ’ s. So me time s the Divisio n Orde r is re fe rre d to a s a divisio n o f inte re st. Mo re o fte n tha n no t, a sing le we ll o r le a se will ha ve multiple o wne rs. I n fa c t, it’ s no t unc o mmo n to ha ve hundre ds o f pa rtie s o wning a n inte re st in a sing le we ll . Divisio n Orde rs T he ma in purpo se o f a divisio n o rde r is to pro te c t the pa yo r o f the pro c e e ds o f pro duc tio n fro m do ub le lia b ility. T he c o mpa ny issuing the divisio n o rde r is re q uiring the ro ya lty o wne r to (1) ve rify tha t the ro ya lty o wne r’ s de c ima l inte re st se t o ut o n the divisio n o rde r is c o rre c t a nd (2) a g re e tha t the c o mpa ny c a n ma ke pa yme nts b a se d o n tha t de c ima l inte re st until no tifie d b y the ro ya lty o wne r tha t the o wne rship ha s b e e n c ha ng e d. 8
11/13/2018 Divisio n Orde rs • A Divisio n Orde r is g e ne ra lly re c e ive d b y a mine ra l rig hts o wne r thro ug h the ma il within 3 to 4 mo nths a fte r we ll c o mple tio n. • T he re isn’ t a de a dline fo r re turning yo ur divisio n o rde r, b ut o pe ra to rs will b e re q uire d to withho ld ta xe s if it isn’ t re c e ive d in a time ly ma nne r. Make c opie s for your r e c or ds and r e tur n the doc ume nts in a time ly manne r . Divisio n Orde rs • I t mig ht b e 3-6 mo nths fro m the time a we ll is c o mple te d to the time yo u re c e ive a divisio n o rde r. • Afte r tha t, it mig ht b e a no the r 2-3 mo nths b e fo re yo u re c e ive yo ur first c he c k. • Pla n fo r up to nine mo nths b e fo re re c e iving o il & g a s re ve nue . 9
11/13/2018 Divisio n Orde r Only T e xas R e quir e s a Division Or de r . Wha t we te a c h in the CMM Co urse De c ima l I nte re st Ca lc ula tio ns Se nd a W-9 to yo ur Divisio n Orde r Ana lyst to pre ve nt a uto ma tic de duc tio n o f 28% se nt to the I RS Use the NADOA Mo de l F o rm Divisio n Orde r to ha ve a n unde rsta nda b le , sho rt, sta nda rdize d fo rm tha t me e ts a ll sta tuto ry re q uire me nts We c ite the NADOA Mo de l F o rm Divisio n Orde r ha ndb o o k (1995) http:/ / www.na do a .o rg / fo rms/ NADOA_Mo de l_F o rm_DO_Bo o kle t .pdf 10
11/13/2018 Mine ra l Owne r Co mmunic a tio n Aug. 1‐12, 2018 Total Total Net Ga llup Po ll o f I ndustry positive Neutral negative positive % % % Computer industry 60 28 10 50 T rust, 2018 Restaurant industry 58 31 10 48 Farming and agriculture 56 24 18 38 Grocery industry 53 27 18 35 Travel industry 50 35 13 37 Retail industry 48 31 20 28 25 industrie s Automobile industry 47 33 19 28 Accounting 39 46 12 27 Oil a nd g a s is 22 nd o f 25 Real Estate industry 46 32 21 25 Publishing industry 43 34 20 23 Oil a nd g a s is o ne o f fo ur with a ne t ne g a tive Airline industry 43 31 24 19 ra nking Internet industry 45 26 27 18 Telephone industry 41 34 25 16 Electric and gas utilities 42 28 29 13 Banking 42 28 29 13 Go o d ne ws: T he 2012 Ga llup Po ll ra nke d Oil Sports industry 42 27 30 12 a nd Ga s la st pla c e , so impro ve me nt ha s Movie industry 40 28 29 11 Television and radio 40 26 32 8 b e e n ma de . industry Education 44 17 38 6 Advertising and public 35 31 32 3 relations industry So urc e : https:/ / ne ws.g a llup.c o m/ po ll/ 12748/ b usine ss-industry- The legal field 34 30 34 0 se c to r-ra ting s.a spx Oil and gas industry 31 23 44 -13 Healthcare industry 34 18 48 -14 Pharmaceutical industry 30 16 53 -23 The federal government 26 19 53 -27 11
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