Revenue Compliance Division

The Revenue Compliance Division is responsible for developing and implementing procedures to assure the timely and accurate accounting of all royalties, bonuses, rents and other revenues received by the Department of Trust Lands. The division is also responsible for developing, implementing and monitoring the managerial and system controls used by the Department of Trust Lands to detect and prevent the misappropriation of trust assets and revenues.

 

Frequently Asked Questions

Reporting

Where are the reporting instructions?

Please refer to the "Current Period Instructions" tab of the excel form for the latest instructions.

Instructions

Column

Instructions

API/Unit Number
Column A
Royalties will be booked on a well level, utilizing the API number. Your company's Land Dept. has a record of the API number for each well. You may also contact the Department of Trust Lands or the North Dakota Industrial Commission for guidance. In reporting Units, refer to the ND Unit Resource Page for a unit number on our website. Format all APIs in common numeric format, with dashes: state-county-well number-xx-xx. No spaces after the API number.
Property Name
Column B
The property name will link to the API number for system verification. Enter the well name that was permitted with the NDIC. In reporting Units, refer to the ND Unit Resource Page for the unit name which will be used in Column B.
Production Start
Column C
Should only be used if paying interest or penalties or an audit settlement covering several months. Not to be used for normal production reporting. Use the numeric format with slashes: mm/dd/yyyy, where "dd" is the first day of the reported calendar month.
Production End
Column D
The production period represents one month. Use one line for one well, one product, and one month of production.
Use the numeric format with slashes: mm/dd/yyyy, where "dd" is the last day of the reported calendar month.
For Prior Period Adjustments, use two lines for each original item being adjusted; one line for the reverse (back out) and one for the re-book (correction).
Each reverse and re-book line will use the original production month date.
Product Code
Column E
If a well reports multiple products, use one line for each product reported for a well each month.
Enter the appropriate product code:
GRY Natural Gas (Wellhead gas, not processed. Include flared gas)
NGL Natural Gas Liquids (plant products)
RSD Residue Gas from the processed stream
C3 Plant Condensate
ORY Oil and Condensate
INT Interest
PEN Penalties
For Prior Period Adjustments, use two lines for each original item being adjusted; one line for the reverse (back out) and one for the re-book (correction).
Each reporting line must be completely filled out across the form when making adjustments.
BTU Factor or Gravity
Column F
Provide the BTU factor value for gas and residue reporting. Use the numeric format x.xxx. For NGL's and plant condensate leave blank. Provide the API Gravity for oil production. Use the numeric format xx.x.
Gross Volume
Column G
(Optional now, but required in the future) The gross volume is the amount of product produced from the well measured at the wellhead. Format to two decimal places. No commas or formulas. We verify the produced (wellhead) volume against the monthly production volume reported to the North Dakota Industrial Commission (NDIC).
Natural Gas: provide the produced volume (as mcf) at the wellhead. Format to two decimal places. NGLs (Plant Products): provide the volume extracted (as gallons) that entered the gas plant (plant inlet gas mcf). Format to two decimal places.
Residue Gas: provide the produced volume (mcf) at the wellhead. Format to two decimal places.
Plant Condensate: provide the volume extracted (as gallons). Format to two decimal places.
Oil & Condensate: provide the produced volume (as bbl) at the well or tank battery. Format to two decimal places.
For Prior Period Adjustments, use two lines for each original item being adjusted; one line for the reverse (back out) and one for the re-book (correction).
The reverse/back out line reflects the volumes & values originally reported. Use a minus sign for negative adjustments. The correction line is the new data; do not net out volumes/values.
Royalty Volume
Column H
The Royalty Volume is the sales volume reported in accordance with lease terms. No commas or formulas. Do not reduce the Royalty Volume by the state's percentage (decimal interest). The decimal interest is only applied to the Gross Sales Value to calculate the Royalty Due.
Natural Gas: Format as mcf to two decimal places.
NGLs: provide the plant products as a summary total in gallons. Format to two decimal places.
Residue Gas: report the total residue volume sold at the plant as mcf. Format to two decimal places.
Plant Condensate: report the total plant condensate in gallons. Format to two decimal places.
Oil & Condensate: The royalty volume equals the oil sales as reported to the NDIC. Format to two decimal places. For Prior Period Adjustments, use two lines for each original item being adjusted; one line for the reverse (back out) and one for the re-book (correction).
The reverse/backout line reflects the volumes & values originally reported. Use a minus sign for negative adjustments.The correction line is the new data; do not net out volumes/values.
Unit Price
Column I
Use the weighted average price of the product sold during this month. Do not use formulas. Format to two decimal places. No dollar sign or commas.
For a Prior Period Adjustment, use two lines for each original item being adjusted; one line for the reverse (back out) and one for the re-book (correction).
Gross Sales Value
Column J
Report the gross sales value of the product sold. Do not use formulas. Format to two decimal places. No dollar sign or commas.
Decimal Interest
Column K
The decimal interest will match the state's decimal interest and will conform to lease terms. Format to eight decimal places (0.12345678). Use a calculated tract interest for reporting tract royalty in state or federal units. See our ND Unit Resource Page for reporting units.
Gross Owner Share
Column L
Owners share of royalties prior to deductions (Gross Sales Value X Decimal Interest). Do not use formulas. Format to two decimal places. No dollar sign or commas.
Gathering/Transporation
Column M
Enter the net value of gathering and/or transportation being deducted from the gross owner share. Do not use formulas. Format to two decimal places. No dollar sign or commas. Deductions should be positive if being deducted from the Gross Owner Share; if it is being added back to the Gross Owner Share, the deduction should be negative. Please see example.
For Prior Period Adjustments, the re-book (correction) line may contain a revised gathering or transportation deduction.
Processing
Column N
Enter the net value of processing being deducted from the gross owner share. Do not use formulas. Format to two decimal places. No dollar sign or commas. Deductions should be positive if being deducted from the Gross Owner Share; if it is being added back to the Gross Owner Share, the deduction should be negative. Please see example.
For Prior Period Adjustments, the re-book (correction) line may contain a revised processing deduction.
Other Deductions
Column O
Enter the net value of other deductions being deducted from the gross owner share. Do not use formulas. Format to two decimal places. No dollar sign or commas.Deductions should be positive if being deducted from the Gross Owner Share; if it is being added back to the Gross Owner Share, the deduction should be negative. Please see example.
For Prior Period Adjustments, the re-book (correction) may contain a revised other deduction.
Royalty Paid
Column P
The royalty calculation: Gross Owners Share less gathering/transportation, processing, and other deductions. Do not use formulas. Format to two decimal places. No dollar sign or commas.
For Prior Period Adjustments, the reverse (back out) line will contain the originally submitted Royalty Paid value; the re-book (correction) will be the revised royalty.
Use a minus sign for negative adjustments. The re-book (correction) will be the revised Royalty Paid value.

Ensure there are no imbedded formulas or linking to tables in the report.
Ensure all columns with dollar amounts are to two decimal places ($34.25).
Ensure there are no blank rows between wells.

What reporting formats are allowed to submit royalty data?

Excel is the only accepted form. The report is available on our website under the Revenue Compliance link.

How are adjusting entries handled?

To make any adjusting entry, you must reverse and rebook. First you must make an entry that will zero out the entry to be corrected, and then rebook the correct entry.

What if we have problems with our accounting system or getting our report to you?

Contact our Department immediately; if it’s a known problem, we are willing to work with you until you can resolve the issue.

Gross Volume vs Royalty Volume?

To clarify the difference between these two. Gross volume is the amount that the unit/well produced during the month; a production amount. Royalty volume is the volume that we are paid on or sold during the month; the amount used to calculate the royalty.

Regulation, Rules, and Lease

Is the Department of Trust Lands exempt from gross production and oil extraction taxes?

Yes, as stated in North Dakota Administrative Code §81-09-02-15, “Exempt royalty interest,” the Department of Trust Lands is exempt from gross production tax. North Dakota Century Code§ 57-51.1-03 states that since gross production tax is exempt, oil extraction tax is also exempt.

What deductions are allowed on oil?

Royalty on oil is calculated based on the greater of 1) the highest posted price for the field where produced and when run, 2) the highest market price paid for the area where produced and when run, or 3) the gross proceeds of sale.

Gross proceeds of sale means income before deduction of expenses. Basically it means the price you sell the oil for, regardless of what expenses go into arriving at that price. For example, if you transport the oil to an off-lease location for sale and delivery, the royalty is calculated based on the gross price you receive at the ultimate point of sale and delivery. In this example you may NOT deduct or “net out” the expenses incurred in transporting the oil to the ultimate point of sale and delivery.

What deductions are allowed on gas?

Royalty on gas is calculated based on the gross proceeds of sale, where the sale constitutes an arm’s length transaction. For a description of what gross proceeds of sale means see “What deductions are allowed on oil.” If a sale of gas does not constitute an arm’s length transaction, Board of University and School Lands Oil & Gas Rule 85-06-06-08 governs calculation of royalties.

What is the maximum penalty and interest that can be applied to delinquent royalty payments?

Oil and Gas Rule 85-06-06-10, “Reports of Lessee-Delinquent Penalty,” states that any sum, other than annual delay rentals, not paid when due is subject to a delinquency penalty of 1% for each 30 day period of delinquency or fraction thereof.

Additionally, North Dakota Century Code §47-16-39.1 states that if an operator fails to pay oil or gas royalties to a mineral owner within 150 days after production, the operator must pay interest on the unpaid royalties. Payment of interest is required whether or not the mineral owner requests it. The maximum interest is 18% per annum until paid.

Do we have to pay royalties on Flared Gas?

North Dakota Century Code §38-08-06.4 details the requirements for when royalties are due on flared gas.

Are we required to report all oil and gas produced at a well or unit, or just the Department’s share?

North Dakota Administrative Code §43-02-06-01, “Royalty Owner Information Statement,” requires that 100% of the corrected volume of oil and gas sold must be reported. This section also states all items that are required on a royalty statement.