Recently received division orders for a well ive been waiting on for a while. It was originally created as a pooled acerage unit, but they changed it last minute to an allocation well. They also updated the plat to an as drilled plat that is not on the trrc website yet. They provided that to me when i questioned the revenue interest on the DO. They moved the last take point further away from the bottom hole location, which took about 85 ft from my lateral allocation. But i had been calculating this for months as a pooled unit. The shift to an allocation has dropped my revenue interest from .32678 percent to .2579 percent. There is no clause in the OGL stipulating anything regarding this. Has anyone ever had any luck arguing for the acerage or pooled unit when confronted with a lesser revenue interest due to the switch to allocation?
A bit curious as to how moving it 85 ft reduces your interest owned by 7%? To somewhat answer your original question, to do that youd be running up a plastic slide covered in grease. There are court rulings out there relating to this, have you read any of those? If not google allocation vs pooling texas. Either which way youll have to hire a very experienced oil and gas attorney for that area and it could get very expensive as its most likely going to court. Good luck sir, the way they are putting together these horizontal units in all of the areas across the US is detrimental to all the mineral owners, almost making 1/3rd to maybe even half of the minerals people own unusable/sellable.
Probably wasnt clear. The 7 percent shift is from the original acerage designation. The movement of the last take point dropped me from .27ish percent to the percentage indicated on the DO. I figured this is a difficult cause but wanted to see if anyone had ever pleasantly plead their case to the company and had any luck
I doubt that you would have much luck in arguing it. The OGL gives the right to drill in whatever manner the operator deems prudent, not the obligation to drill. The last take point is determined by the geology of the reservoir and the engineering needed to capture the fluids. The end of the well has equipment in it. They may be many other reasons for ending short, such as a fault, etc. It is what it is, so be grateful for a new well and the royalties that you will get. If they drill infill wells in the future, they may be able to capture missed hydrocarbons.
I’ve had some outfits actually leave the decision up to me in the past, but I’ve never had the impact of this decision be as drastic as it is. I guess the argument is that spacing rules won’t allow another well to be drilled on the acreage that would be held by this well, and the filed plat includes the acreage in the tract. Its pretty frustrating.
Bob that makes absolutely no sense. The horizontal wells in Oklahoma allow access to reserves that can’t be produced all the way to the section line. A normal section line offset is 660’ for a 640 acre spaced unit, so that is 1320’ of perforations in a 1280 acre unit that can be accessed that wouldn’t normally be. I’ll let you do the math to your satisfaction to see what percentage of additional production that gives the mineral owners.
PLAT.pdf (651.1 KB) So as a little update, I called the oil company with my complaints. Mainly one of them being that they filed a P12 certificate of pooling authority, and there are 4 tracts of land on the permitted plat, and as drilled plat, that will not have any part of the wellbore at all. If this is an allocation well, why are they included, and are they getting paid despite having no actual allocation interest in the length of the well. If they are getting paid, is it by the acreage? If that’s the case, I want my revenue interest to be calculated based on acreage.
What I found out is they changed to allocation AFTER completion of the well due to an unproductive stretch of the well. They said they would look into my complaints because they are valid, and will get back to me.
So when you own, lets say 20 acres in a section to make it easy. The company then files a multi unit horizontal on your minerals and your minerals are allocated at 50% (pray to the mineral gods its just 2 sections involved and you dont drop below 50%). So, now you are getting paid on half your interest, with the other 1/2 unlikley to ever be paid upon. Its the main reason so many mineral companies have gone out of business, due to buying minerals at 100% before allocation values are filed and why the mineral owners that sold 100% interest pre allocation come out way ahead. But, I do agree with your take to an extent, I just dont think the additional production makes up for the 50% loss and I could be totally wrong. We can disagree on it, but thats my take, Id love to hear your response as I havent really run the numbers on it and this old guy always like to learn something new.