Question 1

What is a 1099

Accepted Answer

It is a common type of IRS form, which is a record that an entity or person — not your employer — gave or paid you money. The IRS requires we report the 'gross' royalty, rent or lease payments issued within a given year. This amount is higher than your check 'net' amounts due to taxes and withholdings from your royalty payment. You may receive either a 1099-MISC (Miscellaneous Income) or 1099-NEC (Non-Employee Compensation) form, depending on your account type and the type of payment received.

Question 2

What is AD VALOREM TAX

Accepted Answer

It is typically a county tax based on the appraised value of the oil and gas asset. The values are generally based on the level of previous production or based on the estimated fair market value of well equipment or economic interest in the property.

Question 3

What is CONSERVATION TAX

Accepted Answer

It is a tax levied by the state to provide funds for the states energy conservation, oversight, and research programs.

Question 4

What is a DIVISION ORDER

Accepted Answer

‘Is a document that is used to confirm the ownership level in an oil and gas property. New accounts will remain in legal suspense until signed division orders are returned, to confirm your account information is accurate, and all of your interests are accurately represented.

Question 5

What is a DR 0021W

Accepted Answer

This is a Colorado oil and gas withholding statement. The producer or first purchaser is required to send the DR 0021W, oil and gas withholding statement, to interest owners by March 1 of each year. This form lists the gross income and the amount of severance tax the producer has withheld and paid to the state from your royalty or production payments. Own Resources Operating wells are considered stripper wells which are NOT required to send a DR 0021W

Question 6

What is a JIB

Accepted Answer

JIB stands for "joint interest billing," a form of accounting unique to the oil and gas industry. A Joint Interest Billing (JIB) is the mechanism to bill the costs to the Non-Operating Working Interest Partners

Question 7

What is a LETTER OF ADMINISTRATION

Accepted Answer

are court orders that allow a person to act on behalf of an estate of a person who died without a will

Question 8

What is a LETTER OF TESTAMENTARY

Accepted Answer

is a document granted to the Executor of an estate by the probate court. This document gives the Executor the authority he or she will need to formally act on behalf of the decedent.

Question 9

What is a MCF

Accepted Answer

stands for a thousand cubic feet. It is an abbreviation derived from the Roman numeral M for one thousand, put together with cubic feet (CF) to measure a quantity of natural gas.

Question 10

What is an OVERRIDING ROYALTY INTEREST

Accepted Answer

(O) – A royalty interest carved out of the lessee’s (Working Interest) leasehold interest. As with the Royalty Interest, Overriding Royalty is generally free from any operating costs but can be subject to various taxes and post-production expenses.

Question 11

What is a ROYALTY INTEREST

Accepted Answer

(R) – The mineral interest owner’s compensation under their oil and gas lease for production. This interest is free from operating costs but can be subject to various taxes and post-production expenses.

Question 12

What is SEVERANCE TAX - COLORADO

Accepted Answer

are taxes imposed on the removal of natural resources within a taxing jurisdiction. Severance taxes are set and collected at the state level. Production from certain wells may be exempt from severance tax based on the amount of production (i.e., "stripper" wells) or the type of well (i.e., horizontal, tertiary, deep, etc.). Most Own Resources Operating wells are considered "stripper wells", currently exempt from the Colorado severance tax

Question 13

What is SEVERANCE TAX - KANSAS

Accepted Answer

are taxes imposed on the removal of natural resources within a taxing jurisdiction. Severance taxes are set and collected at the state level. In Kansas, the well must produce an estimated $87/day of production or more.

Question 14

What is a STATEMENT OF AUTHORITY

Accepted Answer

is a legal document that can be used to establish the authority of an individual or entity to act on behalf of another entity in real estate transactions.

Question 15

What is a W-9

Accepted Answer

form is an important document used for taxpayer identification and certification. Own Resources Operating, LLC needs this form in order to understand how to report your payments to the internal revenue service (IRS). For individuals, a Taxpayer Identification Number (TIN) is their Social Security Number (SSN). For companies, trusts, limited liability company (LLC), etc., the TIN is a 9-digit Employer Identification Number (EIN).

Question 16

What is a WORKING INTEREST

Accepted Answer

(W) – Working interest is the right to explore for and produce the mineral interest granted by an oil and gas lease. The Working Interest parties are responsible for operations on the property pay for the costs of drilling, completing, and operating the well. This can also be called Leasehold Interest or Operating Interest.

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