The checks are not in the mail yet, but when they are, it won’t be pretty.
At the Aug. 19 Osage Minerals Council meeting, Chairman Andrew Yates announced that the September payment for a full headright will be $1,360, a decrease of more than $2,000 from September 2019.
“It’s devastating news to our shareholders,” he said. “Many of them depend on that money to live on or supplement their retirement, social security, whatever. It’s just terrible news. We’re in the middle of this pandemic … that’s unprecedented in recent times. Everything is three months behind on payments, so whatever’s happening today, we won’t see until the December payment.”
The slumping headright checks are due in part to a pandemic-induced petroleum production slowdown earlier this year. The Osage Agency was unable to provide the council with a daily production average when requested in open session.
However, according to documents provided by the Bureau of Indian Affairs in response to an Open Records Act request, the agency granted seven emergency shut-in requests in June alone that specifically cited COVID-19 as a reason. Combined, the 120-day shut-in requests cover almost 50 wells and six saltwater disposal wells among 10 leases countywide.
Additionally, 61 leases were terminated for non-production and no new drilling permits were issued in July, as per Superintendent Robin Phillips’ report to the council. Despite public claims to the contrary from producers earlier this year, Phillips said the leaseholders were sent show-cause letters.
“They could not have been producing leases,” Phillips said. “If they were, we wouldn’t have terminated them.”
On top of the decreased production, concerns still are lingering among both shareholders and council members about how long producer payments are sitting in the Osage Agency 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.
According to the Office of the Special Trustee, if a check sits in the agency’s lockbox for more than 48 hours, the person responsible for manually entering the check amount is supposed to also include any interest it would have accrued had it been posted faster.
The Osage Shareholders Association has launched a campaign to request the Department of Interior to remove Phillips from office in part due to those delays.
The lag time also prompted Councilor Margo Gray to publicly repeat her request of Phillips for a monthly breakdown of oil and gas check amounts and the turnaround time before they are deposited.
“The reason that I’m adamant about it and some of our shareholders are … we learned last fall at the summit that there was almost $1 million in that account that hadn’t been transferred for weeks,” Gray said. “That’s why we’re concerned. We’re not asking you (Phillips) to go in every day. We’re just asking that someone in your office goes in before each payment or on a monthly basis to see how many checks.
“This is 2020 and I’m sure that we can get a report on this in some fashion.”