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Royalty & Royalty Disputes

Royalty claims regarding the appropriate value of produced products, proper deductions from royalties for post-production costs, correct royalty rates, royalties associated with processed gas and liquid products, and shut-in gas royalties are among the key issues being raised by royalty owners in individual and class action lawsuits. FTI Consulting has extensive experience in data collection and analysis of royalty payments associated with production from federal, state, Indian and private oil and gas leases. In addition, we have international expertise analyzing the royalty commitments associated with foreign government leases. Based on years of industry experience, FTI Consulting professionals assist in the development and implementation of royalty policies and procedures, interpretation of applicable royalty regulations, and compliance with the royalty provisions of oil and gas leases.

Our Service Offerings

Disputes

As with any revenue-sharing contractual arrangement, royalty disputes may arise that question the proper interpretation or calculation of amounts owed to the royalty owners. This may include accurate accounting by the operator of the producing properties, appropriate application of the contractual and regulatory provisions, and proper allocation of amounts to various royalty owners. FTI Consulting professionals are dedicated and skilled at identifying underlying causes of disputes and leveraging the firm’s industry knowledge base and computing power to examine large data sets and discover information that may be useful to our clients in defending their position.

Investigations

Royalty disputes and controversies often require research and analysis of the facts surrounding an issue, identification of root causes, and recommendations for necessary remediation and prevention of reoccurrence. FTI Consulting investigative teams consist of certified public accountants, certified fraud examiners, forensic investigators, former law enforcement and government officials, technology specialists, engineers, attorneys and former auditors. These professionals are extremely proficient in data collection and analysis, building tremendously large databases; i.e., one that includes actual oil and gas transactions dating back to the beginning of the 20th century.

Strategic & Business Consulting

FTI Consulting is well-equipped to help a client manage royalty costs because of our experience in managing all aspects of royalty agreements and our understanding of the nuances involved. We review a client’s leases and product sales agreements; current federal, state and Indian regulations; and established legal precedents. A compliance analysis of a client’s lease royalty obligations is performed to determine if there are possible exposure issues. If so, we calculate the potential additional royalty amounts and assist the client in making the appropriate business decision to resolve the royalty issues.

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