The Osage mineral estate is still feeling the effects of the one-two punch of the COVID-19 virus and low gas prices.
At the May 20 Osage Minerals Council meeting, Chairman Everett Waller announced that the June payment will be $2,950 for a full headright and acknowledged that checks for September and December may be smaller thanks to the spring production glut that sent oil prices plummeting and left producers scrambling for storage space.
“We know that the coming months are going to be a trying time for our Osage shareholders,” he said. “We are going to try to be disciplined and come back with the best we can for September and December.”
Since bottoming out in early March, oil prices have started rebounding, with West Texas Intermediate trading at $33.49 per barrel as of May 20. Storage space at Cushing and Coffeyville, Kansas, has slowly begun to open up as well, but is still at a premium.
In response to questions from multiple producers, a guidance letter dated May 14 from the Osage Agency asks lessees to submit written requests for producing wells to be shut in rather than just walking away. The requests will be considered on a case by case basis.
“The Osage Agency based on the pandemic … the agency has had to allow individuals to self-identify,” Osage Agency Superintendent Robin Phillips said. “We’ve got maybe five people going out on an emergency basis or if we have a situation where we have to do an inspection.”
Along with the low oil prices, councilors questioned whether the headright check amount was impacted by any delays in depositing checks from the Osage Agency’s lockbox. The Osage Agency is one of a handful of sites nationally that still relies on having someone manually match checks generated by trust land activity with invoices, then credit individual accounts with that revenue, plus any interest accrued. Those checks are supposed to be matched and deposited within 48 hours of hitting the lockbox, but previous checks were diminished due to checks languishing in the lockbox.
“We’re not fully confident that those checks are going out in a timely manner and we’re trying to get every dime that we can for our shareholders,” Councilwoman Margo Gray said.
“We know that some of those checks are still staying in the lockbox for more than 48 hours.”
As a cost-cutting measure, the council declined to accept a quote for the costs associated with printing and mailing its newsletter. Instead, the document will be online only for the immediate future.
“We have shareholders who are hurting right now,” Councilwoman Marsha Harlan said. “We should put a stay on this process. We should send out emails or something that is less expensive. We’re in this pandemic … and have people who will most likely get a very minimal payment in September.”
Although the rest of the Osage Nation campus reopened on May 11, the Minerals Council’s offices will remain closed through at least the end of May due to an extension of the council’s emergency declaration. Access will continue to be by appointment only.