I received an offer of elections to take on the additional non consenting working interest in addition to my consented working interest share. I returned the election form promptly and it was acknowledged that they received it by the operator. It is now time for the wells to start paying out and the additional interest is not included on my division orders. The landman said sorry that was the best we could do for you. Can the operator just decide they don’t want to give you the option after agreeing to give it to you and you signing the election form. The wells are in Eddy, New Mexico.
The question about whether or not you would elect to take on additional workin interest is sent out to all WI at the same time, as part of AFE process. In the event that one or more WI opt out, then those interests will be divided among those WI who elected to take on additional interests. If 100% of WI agree to participate in the well, then there is no interest to be divided up. You would have received a notice that you were being allocated additional interest and you would have paid the extra share of all related well costs. It is not extra income you get for free. You have to have paid the extra up-front costs. Review your AFE and JIB statements to see that you were not paying an increased share (increased decimal) of the total expenses. Generally none of the participating WI will opt out unless they expect the well or the repairs to be a losing proposition. You may want to research the working interest process to get a better understanding of how this side of the oil and gas business works and the economics, including ultimate liability for the cost of well plugging. Read the JOA and other documents that you have signed. And consult your CPA about the proper way to report the revenues and costs on your federal and state tax returns. For individuals, this is earned income on Schedule C.