We have an addidum on all our leases that prevents the producer from charging for production transportation and other costs. So far no one has balked at accepting the lease with with the additions to the lease paperwork.
Thanks Rick for the info on the well number, I did check them out. How did you come up with these numbers?
Keep in mind you can participate with any part of your interest and lease the rest . It is not an all or nothing deal.
Shirl,
There are two other items that the mineral owners need to look out for.
PARTICIPATING IN THE WELL. These means you will pay for your share, depending on your percent of the section, say you own 100 acres then your percentage of all the cost will be 100/640 or 15 5/8 %. Some of these wells cost upwards of $7,000,000. This means the 100 acre owner would need to pay about $1,093,750.
Another clause that is not good for the mineral owner is a Warranty Clause. I think this guaranties the mineral title. Which I believe could be an issue down the road, if some ownership history comes up as to the title. Meaning the mineral owner could have to pay some amount back to the operator.
The Rose well in 33-3s2e is a perfect example of a well not producing to its potential. It is a verticle well, and has never produced anything to talk about. There was another well drilled on Wiles which was around 17,000 feet. We got one check and after that they paid Mr Wiles to change out a barrel every now and then. I am hoping XTO will buy out Jones interest in the Rose well, reenter and do a horizontal.
Ronald,
Well that is the best news I heard about a lease, good for you.
How did you manage to do that? Did you have an attorney’s help?
Rick and Daniel, I would also like to thank you both for all your good information. And I’m also glad I found this Forum.
Also keep in mind you are invoiced as each portion of the well is completed. You have 15 days to “pay up”
Daniel, the % of income and the % of expenses are different. If you own let’s say 5% of a well you will pay 5% of the costs. Your NRI, net revenue interest, depends on the amount of royalties being paid and any overrides. These are subtracted so the working interest income decimal is less than .05
MAD at Citation…
You need to make the election within 20 days of the final order date or you get the default option which will be the highest cash bonus and lowest royalty.
Thanks Daniel. That particular tract is located south and west of Lone Grove. The legal is Section 17-5 South-1 West. We have leased 25 acres and now have 5 more undivided acreas we purchased. My sister has the same amount.
Ronald,
That could be more exciting than playing the stock market:)
I thought this was an intesting permit as it does not drill into the Woodford formation, but into the Caney only.
http://imaging.occeweb.com/OG/Well%20Records/1DD0C988.pdf
I thought the Caney was more on the oil side than gas.
If you participate under the Pooling order you can be required to pay your share of the estimated cost of the well, up front, within 25 days of the date of the pooling .
We leased out some family minerals last year, then purchased a cousin’s unleased minerals in the same tract. We all inherited from our Grandfather. We were paid a somewhat normal rate per acre and 3/16 royalty is listed on the contract. We have YET to lease-out the newly purchased section. I noticed Citation published a pooling order recently and plans to drill. When I contacted them about the small, unleased acreage, they had some clown call us from another leasing company offering us HALF of what another lessee paid us as a bonus. I told him NO Thank You when he made the offer. Now what should we do? I know this is how they play the game, but they are going to drill and they will NOT get this small mineral tract dirt-cheap!
Ann Because a lot of the Oil Co.s are asking for the pooling to be good for a year instead of 6 months you can ask for an agreement for your payment to be made with a notice of spud, it is best to ask the Co before the pooling hearing. It sometimes take a little work but you can get it.Thanks Daniel. We noticed our legal listed with Citation in a published order a couple of months ago. Walter Oil used T.S. Dudley, and now apparently Citation is over it. After speaking to Citation, they had Capital Land call us; that is when their guy shot us a really low offer.
E A You could wait for the pooling and make an election under the pooling.
Thanks Ron. I guess we will do that. I am just so made at Citation for thinking they could throw us under the bus.