Just the other day, I received an email from a royalty owner, addressed to me. It raised my eyebrows for a number of serious reasons, which I want to share with other analysts out there.
My first concern was that it was addressed to me, at my company email inbox. I am the division order supervisor for a small company north of Houston, and I have three division order analysts and a division order technician who report to me. They are responsible for one-on-one interaction with landowners. Each analyst is assigned their own geographic area. Normally, royalty owners know who their assigned analyst is, and they interact directly with them. This owner, however, was emailing me directly because my name and email address had been given to them in the most recent email in the chain directly below the one I received. Otherwise, the subordinate analyst receives email correspondence directly from the Royalty Owner Relations department, which should have received this email, not me directly.
An analyst with another company was having ongoing correspondence with this royalty owner. The analyst had looked online, probably in the membership directory of one of the three professional organizations to which I belong, and gave my contact information to this land owner. That’s taboo among division order analysts throughout the industry. The proper etiquette would have been for that analyst to forward the string of emails with this owner to me separately, apprising me of the situation. This would allow me to reach out to the owner directly without the baggage of the long string of emails trailing below the one addressed to me. I’ve never met or talked to this analyst, but I can safely bet that they are a “twenty-something” most likely with less than two years of experience working in oil and gas land administration.
No, this analyst replied directly to the royalty owner and gave them my name and email address in that reply. The royalty owner then forwarded the string to me, re-stating their problem in their email addressed to me. In order for me to understand the background on the problem, after sputtering about protocol broken by the inexperienced analyst I started at the very bottom of the email string. I needed to read the conversation in chronological order. When I got to the fifth email in the string of 16 total, my jaw dropped.
That fourth email was from the analyst addressed to his company’s legal department. He was asking for legal instruction on how to cover up a mistake he found in the record, so that the owner wouldn’t find out about it. The fifth email was the in-house attorney’s reply. The attorney said to simply do everything necessary to correct the error on a going-forward basis, and explained the reason why it was not possible or in the best interest of the company to correct this owner’s prior payments. The attorney closed his reply with the instruction, “Do not discuss with the royalty owner the problem you found in the company records. We should correct it and move forward, revisiting prior payments only if the royalty owner presses the issue in the future.” Remember: the royalty owner just sent me this string of emails in which I read this in the email fifth from the bottom!
The emails between numbers five and eleven were emails between this analyst and various people in their revenue accounting and production departments. Everyone’s name and contact information was fully visible to this royalty owner. And this owner’s relatives if they decided to share.
I was receiving this email because the company I work for is a partner in the particular well at issue, a well that the other analyst’s company operates. We were paying this same owner in the well, but under a different lease than owned by the operator—a detail that the analyst should have researched before involving me in what could someday be a contentious dispute between this royalty owner and that other company. But my company is in no way involved with the lease under which that company is paying royalties to this owner. We pay the owner royalties under a different, separate lease in which the operator owns no interest. I just needed to get that straight with the reader before going any further.
So the analyst at the other company led this owner to believe that my company owed them money, since the analyst’s company owed this owner money. Not so. The operator has had this owner’s account in suspense for heaven knows how long, but we currently are paying the owner. But now I was the one who needed to work hard to make the owner understand that. Just as you’re reading this trying to understand the true situation, that royalty owner would do likewise and I knew it.
I was astounded that this inexperienced analyst allowed an email instruction from his company’s legal department to get directly into the hands of a royalty owner. Below the attorney’s signoff was the clearly-written warning that the attorney’s email contains information proprietary to the company and it is not to be read by anyone except the intended recipient. That ship sailed, guys, over the horizon and gone.
The first thing I needed to do was extract my company from this blooming dispute, and do it quickly. I wrote a detailed explanation why my company is not involved in paying old royalties under the owner’s lease held by the other company, and wrote it using as much layman language as I could muster. Then I deleted all emails below the email from the other analyst to the owner, the email which gave the owner my contact information. My 40 years of experience as a division order analyst has taught me to never, never perpetuate a wrong-doing, even innocently. I wanted no digital record of sending from my Outlook account any proprietary information from inside the other company. I couldn’t undo the royalty owner already having all 16 of the emails in the long string—including the ones involving the lawyer—but I could make certain that neither I nor my company could be accused of perpetuating the blunder.
Evidently my detailed explanation satisfied the royalty owner. I was able to draw attention to the royalty checks my company had been issuing to the owner for quite some time. I offered proof that the decimal in those checks is correct by giving the owner the calculation formula used to arrive at that decimal. Every number, fraction, percentage or decimal used in a royalty calculation must tie back to a legal document. I explained every digit used in the calculation. Evidently, I was successful in explaining the truth about our obligations to pay a different portion of his royalties than the other company.
While a less-experienced analyst might believe that my next step should be to contact the young analyst at the other company and give him a stern talking-to, that would not be wise. Instead, I merely copied that other analyst on my reply to the owner, in an email containing only a string of 4 messages, not 16. Then I forwarded the string of 16—now 17—emails, separately and privately, to our in-house counsel alerting them to what happened. I have turned the matter over to them. If anything more comes of this involving my employer, our in-house legal staff will handle it.
Be careful out there, young analysts. Stop and think before you act. I’ve seen many times in 40 years how one careless mistake can cost an analyst not only their job, but their career.
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