Frequently Asked Questions - Owner Relations


GENERAL OWNER QUESTIONS:

A. In order for us to correspond with a third party regarding an owner's account we need to be provided with a signed letter by the owner (that includes the last four digits of TAX ID) giving us authorization to discuss their account. If you should have Power of Attorney for an owner, please provide the fully notarized Power of Attorney document.


A. Please provide a signed letter that includes your name, last four digits of Tax ID Number or Social Security Number, phone number, address and email address. Please include the or type of documentation you are requesting (i.e. Division Order(s), 1099(s) or Check Detail(s)). The signed letter will be assigned to an analyst to review your records.


A. It can take up to five months or longer from the first sale on your well before you receive a check. In the event you are advised of a title dispute or adverse claim affecting your interest it must be resolved prior to disbursement of revenue.




CHECK QUESTIONS:

A. Many factors may influence your payment each month, including but not limited to, market conditions, suspended payments, adjustments (including overpayments or underpayments), fluctuating commodity prices, regulatory or contractual changes, production volumes, seasonal conditions and routine maintenance or operating issues which may affect the volumes produced from a well during a given time period.


Possible Reasons: A. No one can accurately predict whether a well will be productive, or how many barrels of oil or cubic feet of gas it will produce.


A. Variances can occur due to special marketing arrangements, unit calculations or other contractual agreements. The value is still proportionally correct.


A. Occasionally adjustments must be made on revenue previously paid to you. When this occurs, the original payment is reversed and the new amount is paid. Adjustments are necessary for various reasons such as: originally provided production figures were not correct, (volumes) or pricing from the transporter or gatherer of production required adjusting; production may be allocated incorrectly and must be adjusted; we received updated title information and an adjustment was made to the DOI, or a tax rate may have changed. We make every effort to properly account for the volume and price in accordance with your lease agreement and state statutes. When a correction is necessary, it could reflect negatively or positively on your check.


A. Payments for oil and natural gas are handled differently. Oil is reflected in the previous month's sales. Natural gas payments denote sales from the previous two months as they require additional time to process both physically and administratively.


A. This can occur because ownership between family members is not always equal. In addition, there is the possibility a party has not provided Surge Energy with their Tax ID Number (TIN), Social Security Number, or other required information. In addition, some family members may own interest in other additional properties. Other factors possibly causing variances in check amounts can be related to stale dated checks, returned checks or money held in suspense.




OWNERSHIP QUESTIONS:

A. Clearing title is the process of verifying that you own the interest. Title is the legal right or evidence of the legal right to property. If you have a title requirement, your inquiry will be forwarded to our brokers and they will contact you directly.


A. Payments may be suspended until certain conditions are satisfied. Generally, royalty payments may be suspended for several reasons including, but not limited to the following: Missing Tax ID, insufficient address, assignment of interest, notice of death, lack of documentation/title confirming ownership, or legal/title dispute.


A. A Division Order is a document confirming ownership information in a particular property/unit and authorizing distribution of funds according to that information. The Division Order does NOT represent a sale of your property or any changes to your lease. When you sign and return the Division Order, you confirm that you agree with the information disclosed in the document. Our division order is based off of the approved NADOA form 1995.


A. A NPRI interest can have an effect on your interest depending on if none/some/all of the NPRI owners have signed a ratification. A NPRI is carved out of the mineral fee estate as a free royalty. While the ratification process is ongoing you may see a fluctuation in your interest that can be a positive or negative impact.




JOINT INTERST BILLING QUESTIONS:

A. Your 1099 Miscellaneous Tax forms will be mailed the last day of January and if it falls on a Saturday or Sunday, the IRS allows for mailing the following Monday.


A. Due to potential postal delays, a Joint Interest Bill may arrive a few days late on occasion. If you have not received a JIB bill within 10 business days from the day it was mailed/emailed, please contact Customer Relations


A. Please make payments payable to Moss Creek and mail to: 7580 N. Sam Houston Pkwy. W., Suite 300, Houston, Texas 77064 Attn: JIB Accounting




1099 QUESTIONS:

A. Federal law requires that individuals and partnerships provide a certified Taxpayer Identification Number (TIN) for the owner account. For individual owners, your TIN is your Social Security Number. Other entities should provide Employer Identification Numbers. Failure to return a completed W-9 form to Surge will result in a backup withholding from your check that is not refundable by Surge or our purchaser.


A. This is a State tax levied upon your pro rata share of production. State governments set these tax rates and they are collected from your royalties and paid by the Operator.


A. Ad Valorem taxes on minerals are levied by the County where your minerals are located. This tax is payable only when minerals are producing and are billed and collected by the County once per year.


A. A levy is a notice issued by a taxing authority (such as the Internal Revenue Service (IRS), Child Support Division, School ISD taxes, etc.) which states that a taxpayer owes overdue taxes or payments. Surge Energy is then instructed by the government agency to garnish the owner�s interest checks and have them directed to the taxing authority or agency until the levy is satisfied and released by the agency.


A. Royalty owners who were paid at least $10 during the calendar year and working interest owners who were paid at least $600 during the calendar year should receive a Form 1099. The IRS does not require Forms 1099 to be issued to foreign, nonprofit or incorporated owners.


A. Amounts reported on Forms 1099 reflect all payments issued to owners during the prior calendar year as indicated on the 1099. Owner information such and name, address and SSN reflect the information Surge had at the time the Forms 1099 are generated. Amounts for checks which are voided and reissued will not be included twice. The amount for reissued checks will be included in the amount for the year in which the original payment was issued.


A. Revenue is reported on the Form 1099 in the year in which the check was issued, regardless of when the owner actually received the check.


A. Federal law requires companies to report payments on a Form 1099 in the year the payments are issued. To comply with is regulation, Surge will not adjust the amount reported on the Form 1099 for check that were not cashed / deposited within the year of issue, even if the check was not received by the owner.
Surge will not reissue checks which have been lost. Instead, Surge will include the amount of the lost check as soon as practicable in the next regular check issued. To void a lost check, the owner must provide a signed “Request to Void a Check” form available for download from our Owner Relations website. Please allow up to 21 calendar days for a check to be received before requesting a new check. If the check is replaced in a subsequent year, the amount of the reissued check will not be included on the Form 1099 in that subsequent year. It will remain on the Form 1099 in the year of original issue.


A. Surge mails Forms 1099 to owners on or prior Jan 31, as required by the IRS. Please allow sufficient time in order to receive your Form 1099.


A. Surge submits Forms 1099 to the IRS on or prior to Jan 31 as required by the IRS.


A. Contact Surge owner relations at OwnerRelations@SurgeEnergyA.com or call (832) 333-2350.


A. Until a valid Tax Identification Number or Social Security Number has been provided and is on file from you, the IRS requires withholding of all revenues. Please refer to the IRS website or seek tax advise for the current withholding rates. If Surge does not have your TIN or SSN, please complete and submit a W-9 or W-8 to OwnerRelations@SurgeEnergyA.com (available for download from our Owner Relations website).
Surge does not issue refunds for backup withholds. If you notice backup withholdings are on your check in error, please contact Surge Owner Relations within 21 days of the date of the check in order to avoid further withholdings.


A. Surge does not withhold federal taxes unless backup withholding is required by statute. Please consult with you tax advisor regarding the payment of estimated taxes.


A. The information on the Form 1099 is sourced to Surge records at the time the form was prepared. If ownership or other changes were not communicated to Surge Owner Relations, you may have to make adjustments on your tax return to report accurate information. You should consult with your tax advisor.


A. The Form 1099 shows the Gross amount before taxes and any other deductions as required by the IRS. The royalty payments are the net amount after taxes and any other deductions. The net amount as shown on the Form 1099 should agree with the total royalty payments received.


A. Surge is not able to provide any tax advice and encourages all owners to seek proper tax assistance.


A. Per IRS regulations, Box 7 includes payments received for oil and gas payments if you are a working interest owner.