I have 2.50 acres of minerals that has a working well on it and they have just drilled a new horizontal well. They have mailed me two division orders...dividing the acreage as 1.25 acres on each order but different decimal interests. The two decimal interests add up to the correct decimal interest. I called and asked why it was done this way and the rep. told me it was because it's on two different tracts and some people prefer it done this way. He told me as long as the total was the correct interest it was nothing to worry about.
Can someone explain this to me.... "because it was on two different tracts" and it's the same section and same well.
This is inherited from my parents estate and it had a producing well at the time I inherited it so it was easy to figure my share of their decimal mineral interest. And as I said the two decimal interests do add up to the correct sum. 0.00061035 I have not seen the original lease.
This is the information on the two division orders:
BPO Net Ac 1.250000 BPO Lse NRI/RI .012500000 BPO Unit Int. 0.00024414
BPO Net Ac 1.250000 BPO Lse NRI/RI .018750000 BPO Unit Int. 0.00036621
I would rather not sign and return the division orders until I understand why they have done it this way. And I want to be sure it won't come back to haunt me that I signed it divided in this way.
Thanks in advance for a reply.
This is mineral interest in Roger Mills County, Oklahoma
Cindy
One is for !/8 on the old well and the other is for a 1/16 ORRI? There are far more brilliant people on this forum who can assist you.
There are some kick-ass wells in Roger Mills County. Hope yours is one
Tom
You didn't give enough information to be able to answer your question. Need the legal description of the wells, what was your decimal on the old well, .00061035? What is the names of the wells? It doesn't make sense that it is in the same section yet they are going to pay a 1/8th on one well at 1/2 your acreage and 3/16ths on the other 1/2 and the horizontal is more than likely 640 spaced but we can not tell because you didn't tell us the legal description. You say original lease, did you sign any other lease? It doesn't add up but it is because of lack of information you provided.
Cindy,
Mineral Joe is right, there are lots of questions that come to mind. One thing to stick to is that the original well should stay the same decimal interest as it has been since you inherited. The payor may be different now but the decimal should be the same.
The decimal interest on the horizontal well depends on your acreage in the pool, the size of the pool, and your royalty. If the payor is the same for both wells, your overall decimal should be greater than one well not the same as before. If both wells are from the same source of supply geologically, you need a lot more information and should demand it from the payor. Think about what your interest will be if the old well is plugged.
So sorry I did not give all the information. I thought those numbers would explain it all, although it was Greek to me. The new well is Kirk 12-12-24. The old well which I don’t think they have produced since I inherited it is Robinson Ranch 1-12. Chesapeake is the company we are dealing with. I do know someone posted that the Kirk 12-12-24 was doing 513 BOPD and I forgot the gas amt. We are traveling today and only have intermittent Internet service. My parent’s Johnny &Jolene Grant interest, on the Robinson Ranch well was .0024414 and that was divided by their 4 children. I do know the transfer division order listed my decimal as .00061035 -same as my siblings and none of us signed two orders at the time of transferring minerals. Does this help? Should we have a lawyer look at this?
Thanks so much for your interest and response.
Cindy
Cindy,
Is it possible your acreage got split into two separate units? Look at the Unit names and see if they are the same.
Is the unit name the same as Property name? Property name on both division rders is Kirk 12-12-24 1H (Royalty). Both say Unit acres 640.
Sounds like the same Unit and well. Check the legal descriptions and see if it shows two different parcels within the section.
It looks like the legal descriptions are the same. Looks to me like they halved my acreage of 2.5 acres and maybe one order is to pay 1/8 on 1.25 acres and the other order is to pay 1/16 on 1.25 acres. I think I will have to call the person who prepared the division orders tomorrow and get a better explanation. If we aren’t satisfied with the explanation I suppose we will have to seek legal counsel. The question about what happens if the old well is plugged greatly concerns me.
We are on vacation right now but the division order instructions said to return by April 20 to receive the first check this month. I have 3 other siblings waiting on me to find out what we should do so if we can’t find the answer here I will take time tomorrow making phone calls. Texas Bluebonnets will have to wait!
Thanks so much!
Check your lease to see if perhaps you have a different royalty rate on gas. Also, look at the division orders to see if one is for gas.
Wade, I am not sure we have a copy of the lease but I am away from home at this time and can’t check my deceased parent’s papers. To know for sure. Is that something that would be on file at the court house? i could call them tomorrow. As far as I can see both division orders are exactly the same except one says.
BPO BPO. BPO
net Ac. Lse NRI/RI. UNIT INT
1.250000 0 .018750000. 0.00036621
And the other is
BPO BPO. BPO
net Ac. Lse NRI/RI. UNIT INT
1.250000 0.12500000. 0.00024414
Both say Status. PA. and both say INT TYPE: 2. (RI). Both say OIL & GAS
This is my reply from Chesapeake. Does it makes sense? And am I safe in signing the orders as they were sent to me?
Ms. Atha,
You do own a total of 2.5 net acres. However, your interest is derived from two separate leases. Under one lease you own 1.25 acres at a 1/8th royalty and under
another lease you own 1.25 acres at a 3/16 royalty. You were sent a set of division orders for each interest.
Both wells are in section 12 and both are 640 spaced, perhaps on the earlier lease there was a pugh clause hence why there is a 1/8th and a 3/16ths lease royalty. You should have 2.5 acres under both wells unless there is more than meets the eye in your lease(s). No one here can do any more than guess without looking at your lease or leases. I'd hold off signing the division order until someone takes a look at your lease(s). It should be simple to understand what the deal is by looking at the lease or leases.
Thanks Mineral Joe! Sounds like a different type of lease was made. I kinda wonder why two transfer division orders wasn’t sent to me the same way when i inherited it 2 years ago. I will be trying to find original lease and won’t sign until I understand the process.
Cynthia,
Since there was an older 1/8th lease I didn't look for it as I thought it might be fairly old but then again I didn't look to see when they plugged the older well. I'd just talk with Chesapeake a little more about it, they will probably explain why there are 2 leases and why your minerals are split between the 2 wells even though they are both 640 spaced in the same section. They have all the answers right there if their division order analyst understands it, if not ask for a supervisor.
Since I am traveling I don’t have records with me but I do have someone who will check out lease for me. In the meantime I decided to check my parent’s decimal interest and figured if the same way Chesapeake figured mine…except my parent’s had 10 acres so I figured 5 acres at 1/8 and 5 acres at 3/16 and came up with the decimal interest my Dad’s checks were on the first well. I don’t understand it but looking at lease should explain it.
Had a bad experience with a division order analyst with another company so I tend to not trust everything I am told. That time I was right and they were wrong…difference of 1/4 for me instead of 3/16. Just being overly cautious before signing anything. But I am probably going to eat crow on this one.
Thanks! At least I know where to come for suggestions and advice!
Update to this situation....As the minerals in question were already leased when my parents purchased them I did not have a copy of the lease in my parents papers....the reply I received from the DO agent was that the minerals were under two leases...one with half the acreage for 1/8 and one with half the acreage for 3/16 - that's why I received two Division Orders to sign. At the courthouse I could not find any record except the original lease that the original owner had made and as far as I can tell it was not divided and it was leased for 3/16. I did find in my parents documents the Transfer of Division Order at the time they purchased the minerals and it was for 1/8. So nothing matches what the DO agent is telling me. My question....if I contact the DO agent will they tell me how to find the lease they are now using? OR will they send me a copy?
Seems it deleted my post, but Cynthia here is a jest of what I wrote.
Say 2 brothers owned 1.25 acres each in a section and one leased his at a 1/8th and the other leased his 1.25 at a 3/16ths, then they both sold to your parents, your parents would own a 1/8th royalty in each 640 spaced well and they'd also own a 3/16ths royalty in each 640 spaced well or a total of 2.5 acres at a 5/32nds, which would be 0.00061035 royalty in each well.
A copy of both of the leases will tell the story, but perhaps you can understand what is going on or how it could occur.