I received a call yesterday from a person asking about buying 14 acres of mineral interests at 36-1S-3W that I just received with the passing of my mother. I am very new to this and needing any advise on this that I can get. Is there something going on in this area? It seems that there is a lot of talk on this website about companies wanting to buy mineral interest.
Yes, there is a lot of mineral buying going on right now in Carter County. If you just inherited, then slow down and do not let them rush you. In your case, you have quite a few cases at the OCC pending for horizontal drilling, pooling, etc. I would not sell if it were me. You have a nice amount of acres and the possibility of more than one horizontal well down the line. (On the flip side, could be a dud)
Casillas dropped their pending cases, but Echo has theirs pending. Rumor has it that they sold their acreage to Continental. Judging from the calls I have had from Continental wanting to buy my acreage nearby, I think they are consolidating before they drill. ( I am not selling…)
Read everything in the forum on the Carter County topic so you get caught up to date. Make sure your name and address is filed in the county clerk’s office. Has your mother’s estate been probated? (My condolences). You need to find out from the executor if your mother was receiving any royalties and if so, contact the operator and get into pay status under your name.
Thank you so much for the advice. My mother had a deed leaving the minerals to me. I was her only living child. Yes she was receiving 2 checks for royalties so I will call the number on the check stubs. You mentioned Continental, I received a letter from Continental talking about a Proposed Plan of Unitization Lexington Unit for Sections 29,30,31,32 T1 R2W and I have minerals in sections 30 & 31. Should I sign it and do you know what it is all about?
Get those royalties in your name first. Send a certified letter return receipt to the Division Order analyst at the companies that are sending the royalties. Explain that you are the heir and need to make a change in the payment status. Ask what they require for proof. Always send anything like that by certified letter and keep copies of everything. They may need probate document copies. They may send you a new Division Order. Make sure it is on the NADOA form. Come back if you need help on that. You don’t want them changing any terms of the original lease.
Does that CLR plan have a 2019xxxxx number at the top? I can look it up and read it. Pretty sure I know what it is about, but need to read it first.
I do not see a 2019XXXXX number at the top or anywhere on the documents from CLR.
Thank you and yes I will probably have other questions during this process 
OK, that was probably directly from them instead of the one that comes next through the OCC.
Never sign anything you don’t understand. They need about 63% or something like that of the mineral owners to sign. They will probably get it without your signature, or folks may balk at a unit that big and not sign. You can delay it for a bit while you are getting up to speed and getting everything else in its proper place.
I have really been reading up on what is going on in the Carter County area. I even came across some paper work that my mom had received prior to her passing and it referenced case #201802084 after looking it up on the OCC website the last Docket Code was ordered that the cause for trial order was dismissed. Does that mean they will proceed with the horizontal well?
They will not proceed with that company at this time. Echo sold a lot of their properties to Continental. Casillas had cases in there as well. Make sure your name is correctly filed in the county courthouse so that you get any new cases.
Is there a reason they will not proceed with Echo? or is it that there are issues with drilling a horizontal well?
Echo is not really an experienced drilling company. They sold out to someone who is. They will still have a working interest in the well, I suspect.
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M_Barnes you mentioned they sold out to another company. Did they sale out to another company for the possibility of a horizontal well on section 36? I received paperwork from Continental on section 30 & 31 back around August 1st.
Echo sold to Continental so chances are better that it will get drilled. Timing is the question.
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How are royalties paid out on a multi unit horizontal well? Example: I have 2 sections in a 4 section unit that Continental is wanting to drill 9-17 horizontal wells on. My sections would not be included with the first 9 wells but would I still be paid an interest?
Yes. If you have mineral interest anywhere in the unit you are included. The spacing will be 2500+ acres so the more sections you have interests in the higher your royalty decimal number.
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Slight clarification on the last statement. The amount of acreage you hold will determine your decimal amount. The general equation is net acres/spacing acres (actual) x royalty x % perforations in your section. If the spacing is 640 acres, but the section is not actually 640 acres, then the actual acreage is used. If the well is drilled across two “640” acre sections, the the percentage of the perforations for the portion of the well that is in your section makes up the last term. If the unit is spaced at 1280 or larger acres, then the last term really doesn’t apply since the larger spacing overrides it. In that case, you usually get paid on every well that is drilled according to the spacing terms.
Thank you, yes that makes sense to me So my next question would be should I sign the letter from Continental for the Plan of Development? What would be the pro’s and con’s of not signing?
M_Barnes you mentioned that “If the unit is spaced at 1280 or larger acres, then the last term really doesn’t apply since the larger spacing overrides it” can you give me an example of how royalties would be calculated for the larger acre units?
net acres/spacing acres (actual) x royalty x % perforations in your section.
For example: 10 acres net, 640 spacing, 20% royalty, well 50% in your section. 10/640 x .20 x .50= 0.0015625 decimal interest. For every horizontal well in that section, each one would have a certain split based upon the % of perforations in your section, so the decimal interest might vary slightly. They cannot drill within either 330 (or 660’) feet of the east or west edge. But that spacing only holds one section. You get paid on every well that lands in your section.
if they space at 1280 (2 sections), then the equation is: net acres/spacing acres (actual) x royalty. 10/1280 x .20= 0.0015625. Same decimal, but you don’t include the last term since the well is 100% within the 1280. Again, I am assuming a north-south well and no drilling in the easements. You get paid on every well that lands in either/or both sections.
If the spacing becomes 2560 4 sections), then the equation is: net acres/spacing acres (actual) x royalty. 10/2560 x .20=0.00078125. That means that you would have a smaller decimal with every increase in spacing. On the one hand, if they drill lots of wells, they do not have to abide by the 330’ spacing on the lease line and can add another well in. You would get paid on any well in the four section unit. That is the upside. The downside is that they can hold that entire 2560 acres with only one well and you would only get a small fraction of it. Personally, I would rather see them drill the original two section well in the east 1280 and another one on the west 1280 first to confirm the geology before I signed the unit agreement. Read the agreement and see how many wells they are proposing. You have to hope that they would actually drill them.
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They are proposing 9-17 wells so would they be required to at least drill 9? Or not?
Read the documents to see if they are required. Probably only one is required.