Allocation Factors

Oklahoma Mineral Rights Grady County, OK
1

Have some questions about Allocation Factors involved with cross-section horizontal wells - and yes, I understand the basics of what an Allocation Factor is but…

  1. Is there a way to validate the Allocation Factor being applied to each Section? How does one go about obtaining the actual well production volumes for each Section involved? I have checked the OTC website and found the Oil volumes and Gas volumes for the wells in question but have been told that the Gas volumes may not be accurate. I have asked the company involved for copies of their Plant Statements but was told their purchaser services more than just the wells involved in my checks so they won’t provide them.

  2. Can Allocation Factors (AF) be changed without the re-issuance of a new Division Order (DO)? Have copies of the DO’s originally sent to me and all but one reflect the AF being applied. However, the one DO that does not reflect a AF I am now being told was incorrectly paid out. As a result, I haven’t received a check in the last two months and when questioned was told they had corrected the AF and payments were being held until my account reflected a positive balance.

  3. If a wrong AF was being paid, can the Company withhold payment on all other wells under my Owner number/account and use those amounts to offset and recoup the amount overpaid on the one well? Or should they only be withholding payouts from the one well involved?

The above involves payments previously received and now being withheld by Roan for the Langston 12-1-9-6 (Sec 12) 1XH, 2XH, 3XH and 4XH wells. The mis-allocation was on the 3XH well but the others were being paid correctly.

Thanks for any assistance.

2

  1. The final order of the commission gives the percentage of perforations for each section. It is based upon the actual survey of the well. The total production for the well is then allocated to each proper section. (there is no reliable way to really know if a certain perforation is “working”-yes research being done on that now) Gas numbers are never really perfect on either your check or the OTC. Too complicated to go into now.

  2. Some companies start paying on wells before the final order is issued so that they won’t have to pay interest. Not sure if that is the case here, but it can happen. If you overpaid, then they will hold funds until you are even or positive again.

  3. Depends upon the company, Generally, I have seen that they roll up all the funds on the check. Essentially letting the other wells “catch you up”. You can try fussing, but it may not work.