This article originally provided by The Charleston Gazette

August 11, 2011

Mineral rights owners to get advice on solving underpayment concerns

By Eric Eyre

CHARLESTON, W.Va. -- When Mary Ellen Denomy speaks to oil and gas mineral rights owners at The Greenbrier next month, she plans to dress up as the fictional character Sherlock Holmes and deliver this message: "Use that magnifying glass and make sure those numbers are what you expect them to be."

Denomy, a certified public accountant who specializes in mineral rights, will help royalty owners analyze contracts to ensure gas companies are not underpaying them.

"It's not uncommon to find lots of examples of royalties not being paid properly," said Denomy, who lives in Colorado and consults with county and federal officials on royalty payment disputes. "Individuals need to understand how they are getting paid."

Denomy is one of about a dozen experts scheduled to speak at the National Association of Royalty Owners conference Sept. 7-9 at the resort in White Sulphur Springs.

Denomy said royalty calculations are complex. Underpayments can be caused by clerical errors, computer glitches and other mistakes. Mineral rights owners must be scrupulous, she said, and compare their contracts to the check stubs that break down royalty payments.

"They get a check, and with that comes a lot of detail on how they're getting paid," Denomy said. "It's important you understand those numbers. It's your responsibility as a landowner to say, 'How did they get to that number?' "

Denomy said many large gas companies have "one-size-fits-all" computer software programs that generate contracts. No one at the company actually reads the contracts, she said. Also, many of the larger natural gas firms have multiple divisions that don't always share information.

If royalty owners discover they're being underpaid, they should first send a certified letter to the company, saying the contract terms aren't being followed.

"It's up to the individual to say they're not being paid correctly," Denomy said.

If the problem isn't fixed, she recommends that mineral rights owners have their lawyer send a letter to the company.

"If you have a lawyer correspond with the company, the company may take it more seriously," Denomy said.

Several years ago, royalty underpayments in West Virginia made national headlines after 10,440 natural gas royalty owners filed suit against Columbia Natural Resources, alleging the company wrongfully calculated payments.