Taxpayer Identification Number
Federal law requires that individuals and partnerships provide a certified Taxpayer Identification Number (TIN) for the interest owner account. For individual interest owners, your TIN is your Social Security Number. Other entities should provide Employer Identification Numbers. If the appropriate TIN is not received, Bonanza Creek is required to withhold 28% from your payment for federal income taxes.
The interest owner’s decimal interest in a well is calculated by taking the net acres owned in the spacing unit divided by the total acres in the spacing unit times (x) the royalty or override rate associated with the interest. The well interest is then multiplied by the dollar amount of total production Bonanza Creek receives from the purchaser. Changing market conditions may cause price fluctuations. Operational or mechanical problems or routine maintenance may temporarily impact production, causing downtime. Any of these conditions may increase or decrease the amounts paid to interest owners of interests in oil or natural gas wells. If production volumes and/or prices fluctuate, the amount of your check will be affected accordingly.
Bonanza Creek’s payments are made in accordance with applicable State Statute. After the payment for initial production is made, Bonanza Creek pays for oil and gas production two months after production occurs. Bonanza Creek’s minimum payment threshold is $50*; therefore, payment will be made when the accumulated funds amount to $50*. Owners can expect payment in the last week of the month.
*Effective as of June 1, 2015.
For your protection, payments may be occasionally suspended due to questions regarding your account. Examples of when such suspension could occur include, but are not limited to:
- When your address is not current
- When a title may be in dispute
- During a transfer of property
- When an interest owner dies
- When we do not have a TIN on file
Retroactive Adjustments to Payments
On occasion adjustments are made on current checks for prior months’ payments. When this occurs the original payment is reversed and the new amount is paid. While we certainly try to avoid these types of adjustments, many of the causes are outside of our control. This may occur when there is a subsequent adjustment made to Bonanza Creek’s remittance by the purchaser of the oil and gas from the well(s), a change in a spacing unit in accordance with field regulations, or a resurvey of the spacing unit which requires a recalculation of the affected owner’s interest.