Introduction.
Oil and gas exploration and production and the resulting payment and calculation of royalties, can be very complicated. The purpose of this page is to give an overview. In the end, our advice for almost all situations where someone is not receiving royalties is going to be to contact a lawyer to help you with your royalty payment problem. But don’t worry! The good news is that in West Virginia there are statutes that make it clear that you can sue for unpaid royalties, and if you are successful, those laws either require the operator to pay your attorney’s fees, or award you enough money to pay the lawyer an hourly rate or a percentage of what you win.
What is a royalty?
The owner of a mineral tract (or surface and mineral tract) that has been leased for the drilling and operation of a gas or oil well by that owner (or a predecessor/ancestor) is almost always entitled to be paid a royalty by the operator of the well. (The driller often continues for at least a period of time to be the “operator” of the well. But the driller often sells the well to another entity to operate it. So we will use that term “operator” for the entity that is supposed to be paying the royalty, whether it is the entity that drilled the well or a successor.)
A royalty is usually a percent of the money that the operator gets for selling the gas. (There are also some old leases with “flat rate” gas royalties. If you have been receiving the exact same small amount in every check over a period of years that may be your situation. But you should still contact a lawyer if it has been years since you were paid.)
One mineral tract can often have its ownership shared by several “cotenants” (usually family members) who under the original lease should all receive a share of the royalties based almost always on their share of ownership (often stated as “net acres”) of the total acres (“gross acres”) in the tract at the time it was leased.
What wells should be paying royalties?
Wells that are producing gas or pumping oil should be paying a royalty. However, if the well is not producing, then no royalty has to be paid to you. Old wells eventually drain out of the rocks all the oil or gas they can, and then they naturally stop producing. Particularly if you have been getting royalty checks for a number of years but they have gotten smaller and smaller, this may be happening.
Even for wells that still have oil or gas, operators sometimes stop producing and turn off the valves at the well head (or stop pumping the oil) and “shut in” the wells. This can be because of pipeline or other equipment problems, or the well bore has become clogged and needs cleaned (“swabbed”) out, or even because the demand for buying their gas is low. So you may want to try to check and see if the well is still producing before you contact a lawyer.
One way to start checking if the well is producing is to visit the well — if you can. If it is a gas well, you may be able to hear the gas flowing out (but not always if the production is too low to make a noise), or see a meter on the well that is showing production (take a picture). If it is an oil well, it should have a rocker arm (called a “pump jack”) on the top of the well with a gasoline or electric motor. The pump jack will not run all the time, particularly as wells get older because less oil flows to the well bore to be pumped out. But if you can see that pump jack rocking back and forth, then you know there is production for which you should be getting paid (at least each time the truck loads the oil out of the tank and takes it to market, which may not be every month).
While you are there, look for and record the “API number” of the well – keep reading.
Instead of going to the well, it may work to see if the operator is reporting the production to the State. Well operators are required by law to report the amount of gas or oil they are producing to the State — annually for conventional vertical wells; quarterly for the newer horizontal wells. This reporting requirement started out in order for production from various formations to be known publicly in order to use that information to determine where it was a good idea to drill the next well. The reported production is also used by the State to double check if the operator is paying the State severance tax which statutes say is to be paid by the person “in the business of severing natural gas or oil for sale, profit or commercial use”. So as a general rule operators probably do properly report the amount of their production because they do not want to get in trouble for not paying proper taxes. (Not everyone agrees with our assessment and some want government inspections of meters required on wells, which WVSORO would support.)
However, we have always suspected some do not report correctly. And many industry members who are not able to drill the expensive new horizontal wells are losing income as production from their inventory of older conventional, vertical gas and oil wells decline. So we see under and none reporting happening more and more. Nevertheless, looking to state records is one good place to try to find out if the operator is producing the well.
Two places to look are the West Virginia Department of Environmental Protection, Office of Oil and Gas, and the West Virginia Geological and Economic Survey “Pipeline” page. To do that you pretty much need to know the “API” number of the well. The API (American Petroleum Institute) number functions like a kind of Social Security number for the well. Every well has to have one. The royalty checks for horizontal shale wells have to have the API number on the check stub. And all wells have to have it noted somewhere on the well itself. The API number even looks like a social security number. The first three numbers will be 047 (or sometimes just 47) which is for West Virginia wells. (And that 47 at the start of the number tell you that the number you are looking at on a well is the API number and not the parts number of a piece of equipment or the operator’s internal well number.) Then the API number has three more numbers (sometimes starting with a zero) that are the number for the county where the well is located. Then there are (usually) five more numbers (usually starting with a 0 or two) for that particular well. If you are having trouble finding or understanding about API numbers go to our web page on API numbers.
If these efforts do show production, and you are not getting royalty checks, definitely go to a lawyer. If you cannot be figure out if there is production using these ideas, or if they show no production but you are skeptical, it may still not hurt to see a lawyer to help you figure out if there is production.
If the well is producing and the operator of the well does not pay, what should I do?
Time to see a lawyer. But first, gather all your papers that you have for the well. Any old check stubs or other communications are good. If you have a copy of the lease, that is especially helpful. If you have a copy of the property tax statement/ticket for the mineral tract be sure to take that. If you don’t’ have that for the mineral tract, and if you are or know the surface owner, at least take the property tax statement/ticket or receipt for the surface tract.
What am I entitled to?
If the well has been producing and you have not been receiving royalties, then the amount you are entitled to depends on whether it is one of the newer horizontal wells or an older “conventional” vertical well. Almost every well drilled in West Virginia since around 2008 is a “horizontal” or “shale” gas well. However, most wells paying royalties in this state are older wells that were drilled straight down vertically. These are often called “conventional” wells, and so we will use that term.
Conventional Wells.
First we will talk about conventional wells, if the royalty was not paid within 6 months of when it was due, unless there is a bona fide dispute over whether you are entitled to the royalty, you will be entitled in court to 3 times the amount of the unpaid royalty! Bona fide disputes of whether you are entitled to any royalty are relatively rare – like whether it belongs to you or your long lost cousin or step-sibling.
In addition, for conventional wells, the court may award reasonable attorney’s fees and costs to the “prevailing party”. Notice that the attorneys’ fee payment provision is for the prevailing party. So you want to be sure you are entitled to back royalties before you sue, and your lawyer should help you with that.
Finally, for conventional wells, the lawsuit can be brought in the county where the well is located or perhaps in other counties where the driller does business. A lawyer is more likely to take such a case if it is to be brought in the county where the lawyer has the lawyer’s office or a nearby county.
The West Virginia Code provision providing this remedy for these conventional wells is W.Va. Code §36-4-9c. which was passed by the Legislature in 2025 and took effect for suits filed after July 1, 2025. The West Virginia Royalty Owners Association , the West Virginia Surface Owner’s Rights Organization and the Farm Bureau helped push that through and/or influenced its provisions.
Horizontal Wells
For horizontal wells the provisions are different. The operator has to pay the royalties within 60 days after the gas is sold (or 120 days if it is a new well and this is the first payment). This is not true of course if there is no record title of their ownership, if there is a legal dispute about who owns the interest, if the royalty owner is missing or unlocatable, etc.
Horizontal wells produce 60 times the gas of conventional wells. So the penalty for this late payment is different because the amount due is expected to be much higher. So (instead of the triple damages for conventional wells) the royalty owner is entitled to an interest payment in addition to back royalties. The amount of interest on the unpaid royalty amount is calculated at the prime rate plus two percent (compounded quarterly). Also the statute does not provide for attorneys’ fees the way the conventional well statute does, but there is usually enough money at stake from a horizontal well to pay the attorney on a contingent fee basis so you will not have to pay much if anything up front.
The West Virginia Code provision providing this remedy for horizontal wells is W.Va. Code §36-4-9c. which was passed by the Legislature in 2018 and continues in effect. The West Virginia Royalty Owners Association, the West Virginia Surface Owner’s Rights Organization and the Farm Bureau helped push that through and/or influenced its provisions.
What about these deductions disputes I hear about?
Most old leases for driller/operators producing your gas or oil from your property required the driller to pay a royalty of only 12.5% (usually stated as one-eighth). That means the operator got to keep 87.5% of the value of your gas. Many of those leases were signed back when the driller only owned the well, and another company owned the gathering liens that took the gas to market/transmission lines. As time went on, companies became more “vertical” and owned not just the wells but the gathering lines, and even also owned the transmission lines. (Whether some lines are gathering or transmission lines can be a blurry area.) So the companies claimed they could deduct from your 12.5% some “post production ” costs including pipeline transportation, treating the gas, and even “line loss” because their pipes leaked your gas.
Numerous class actions have been brought against the biggest gas companies that tried to take deductions. If your royalty had deductions that got you into those class law suits, you would have gotten some type of notice and probably some kind of payment. In those cases the West Virginia Supreme Court has ruled that post production deductions can only be taken if they are very specifically laid out in the lease language (or any later amendment to the lease). So if your royalty payment was not in one of those class actions (probably because the operator owing you royalty was a smaller operator) you may be entitled to the full unpaid royalty and maybe even some additional royalty payments from when you were getting paid some royalty. Don’t get your hopes too high on previous deductions. Suing over deductions is complicated and may not be something your lawyer wants to try — at least without you paying some up front fees.
What if there is an “arbitration” clause in the lease?
Arbitration is when parties to a lawsuit decide not to use the judges and juries of court system, but instead to use a private lawyer (or sometimes three) to rule on their dispute. This is sold as being faster and maybe simpler than the court system. (It is more expensive because judges are free and arbitrators have to be paid by the parties.) Generally lawyers for ordinary citizens, as opposed to corporations and other businesses, prefer judges and juries. And most importantly, if there is a clause in your lease itself agreeing to arbitration if a dispute arises, then your case cannot be included in a class action. The very early leases did not have arbitration clauses. With the filing of more and more class actions, more and more drillers put arbitration agreement clauses in leases.
Does having an arbitration clause in my lease mean that I cannot get my back royalties? We know of lawyers who will take cases where the lease has an arbitration clause if there is enough money at stake. Some arbitration clauses may try to limit your right to attorneys’ fees, interest, etc., but we think those attempts to avoid what the Legislature passed will not work. If you have trouble finding a lawyer who will take such a case, contact us and we will steer you to one who may.
What lawyer should I use?
Most lawyers would be able to bring these law suits, so if you have one you know and trust, that might work if it is a simple royalty situation. But generally we would advise to use a lawyer who does oil and gas leasing or other oil and gas law suits (on the side of citizens and not operators). Some may advertise. WVSORO has a web page of lawyers who have asked to be on our site for these purposes.
What if I have more questions?
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