FOR 1ST TIME PAYEES:

The distribution represents several months of production sales and going forward you will be receiving a payment for a single month production sales on your check.

THEREAFTER:

Our accounting system will generate a monthly check for each owner as long as the amount is greater than $25.00. If the monthly amount is less than $25.00, it will be held in minimum suspense until the account total equals $25.00 or more and then released that month. In November of each year, Paloma will release all minimum suspense funds that are less than $25.00 but greater than $5.00 and a check will be issued. Paloma will issue 1099’s in the month of January following the end of the prior year for your tax planning purposes.

Below is an explanation of the various items that you will see on the Revenue Statement that accompanies your check.

Well Name:	The well name will always be the first entry before any production detail
Prod Code:	OIL – Oil Sales measured in barrels RESIDUE – Residue Gas product measured in MCF NGL – Natural Gas Liquids measured in gallons
Prod. Month:	The month the production was produced
Unit Price:	The price per unit received from purchaser ($/BBLS, $/MCF, $/GAL)
Decimal Int:	Your decimal share of the total well – this should match your Division Order
Type of Int:	RI – Royalty Interest ORRI – Overriding Royalty Interest
Gross Vol:	The total of the volumes sold in the production month for each product
Net Vol:	Your decimal interest share of the total volumes sold for each product
Gross Val:	Total value received for the total production sold in the production month
Net Val:	Your decimal interest share of the total value for the volumes sold
State Taxes:	SEV – State of Oklahoma Severance Tax – remitted to State of OK (Net) – your decimal share of the total Severance Tax PROCESSING, GATHERING, COMPRESSION Costs associated with getting the production to the sales point (Net) – your decimal share of each of these costs OK W/H TAX – this only applies to non-residents of Oklahoma (Net) $0.00 will appear if you are a resident of Oklahoma (Net) $ amount will appear if you reside outside of Oklahoma Instructions for reporting this tax payment will appear on 1099s
NetRevenue:	The net value less any net Sev Tax or other deduction is your net payment

Any questions regarding the decimal interest shown on the statement or changes to the address or name, should be addressed ownerrelations@palomaresources.com