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Lease Records

Our Lease Records Department maintains and controls land records and is responsible for payment of bonuses, damage settlements, delay rentals and minimum royalty payments. It also maintains legal descriptions, remarks, special obligations, well references, tracts and leasehold ownership information. This information is tracked to provide reporting and analysis functions required by land and lease owners.

Division Orders

Soon after a well begins producing oil or gas, each owner of an interest in the well typically receives a division order. An exception may be a subsequent well or wells in a unit or integrated section. A division order is an instrument between the payor of production proceeds and the owner of an interest in a property. The division order will furnish:
  • Property name
  • Property number
  • Description of the property
  • Decimal interest owned in the property
Southwestern Energy’s division order is based on the Model Form Division Order, which was developed by the National Association of Division Order Analysts and was designed to meet the requirements of all the states where we operate.

Owner Numbers & Property Numbers

Southwestern Energy issues thousands of checks each month. In order to manage all the owners in our system, each owner is assigned a unique owner number. Each well is also given a unique property number. The owner number and the associated property number will appear on all correspondence from Southwestern Energy including division orders and check details attached to payments made for production from the well or wells. So that we may better assist you, please include your owner number and property number in any correspondence addressed to the company.

Payment Calculations

The amount of payments made to an owner is determined by the owner’s decimal interest in the well, the amount or volume of production and the price paid for the production. The gross amount to be paid to all owners is equal to the volume of production multiplied by the price paid for production. An owner’s individual gross payment is equal to the total gross amount paid to all owners multiplied by the individual owner’s decimal interest in the well. In most cases, the gross amount paid to an owner will be reduced by a state severance tax.

The price for production sold each month may fluctuate due to market conditions. For instance, during 2005 the price paid for natural gas rose dramatically after Hurricane Katrina disrupted production in the Gulf of Mexico. Prices paid for production at that time were some of the highest ever received. Market conditions such as these can increase the amounts paid to owners of interests in natural gas wells. These same conditions have similarly influenced crude oil prices. In a normal scenario, a gas well that had been producing at a fairly consistent monthly rate would have generated much larger checks for owners simply due to the price increases caused by such extreme market conditions. Therefore, please realize that similar events can affect the prices paid for production. If production amounts or prices change, the amount of your check will be affected accordingly.

Backup Withholding Tax

As a payor of proceeds from production, Southwestern Energy Company is required to report to the Internal Revenue Service all payments made to interest owners. Therefore, your tax identification number from your division order is requested for reporting purposes. The tax identification number for individuals is your Social Security number. If you represent a company, it will be your company’s tax identification number. If Southwestern Energy does not receive your tax identification number, we are required to withhold a federal tax referred to as "backup withholding." The backup withholding tax rate is 28 percent. Click here for a downloadable W-9 form to provide your tax identification number to Southwestern Energy.

Ownership Changes

During the life of a well, there may be a need to update ownership records. This could be due to several types of transactions or occurrences, such as sale of the property or mineral interests therein or the death of an owner. In order for Southwestern Energy to update our records to reflect such changes in ownership, the company must be provided with the appropriate instrument reflecting the change in ownership that has been recorded in the real property records of the county or parish in which the well is located.

Retroactive Adjustments to Payments

Occasionally we have to make retroactive adjustments on current checks for prior months’ payments. If Southwestern Energy has to make such an adjustment, it will impact the amount of your check. While we certainly try to avoid these types of adjustments, many of the causes are outside of our control. We regret if this happens and will provide an explanation of the adjustment upon request.

Summary

If you have questions we will be glad to help you. You may contact us by e-mail at ownerrelations@swn.com, or you may call Customer Relations at 1-866-322-0801.