It now appears that ConocoPhillips will arrest all payments to PBT from the Waddell Ranch properties until ConocoPhillips has recouped its overpayment to the trust of $5.9 million.
Permian Basin Royalty Trust Announces September Cash Distribution
As previously reported, ConocoPhillips, as the parent company of
Burlington Resources Oil & Gas Company LP, the operator of the
Waddell Ranch Properties, notified Permian's Trustee that as a result of
inaccuracies in ConocoPhillips' accounting and record keeping relating
to Permian's interest in proceeds from the gas plant production since
January 2007, ConocoPhillips overpaid Permian approximately $5.9 million. On September 19,
ConocoPhillips informed the Trustee that it would withhold proceeds on
the theory that it is recouping the claimed overpayment in part through
deduction of the current month's distribution from the Waddell Ranch
Properties of $4,068,067.15. As a result,
the distributable proceeds for the current distribution are only
proceeds from the Texas Royalty Properties. ConocoPhillips has not
informed the Trustee whether or when it intends to withhold the
remaining amount of its claim. The Trustee continues to evaluate the
claim for overpayment.
action by ConocoPhillips recoups almost 69% of its overpayment, and
drastically reduces the September distribution to PBT unit holders.
Since the overpayment was due to miscalculation by ConocoPhillips and
not to any fault of PBT, I would think that any lawsuits by unit holders
against PBT that arise from this matter would have to be indemnified by
ConocoPhillips. But that's just my opinion, and PBT may incur increased administrative
& legal fees in addressing this matter.