Got an AFE to plug and abandon. What happens if I don’t sign it? We have 10% in the well in Oklahoma.
Have you signed a Joint Operating Agreement? Or did you elect to participate in the well when you were force pooled?
I would hazard an opinion that you might be sued for non-payment. However, you could propose to take over the well and get an assignment of the other 90% and try to produce it at a profit yourself and be responsible for all the P&A costs.
Lots of folks (including me) sometimes forget that when the party is over, you have to pay the fiddler.
Is your 10 percent a working or just revenue interest? Most of the time if you have a 10% interest in a well that you have been putting a share of money into then you have to pay that 10% of the cost of plugging. Shouldn’t be TOO much money, but then again it depends on the total depth of the well.
Dear Mr. Edwards,
If she received an AFE, I would assume that she has a working (though likely forced) interest. Average P&A costs last year in Texas and Oklahoma was $25,000.00 for onshore wells (but in OK, that is the only kind you have). That does not include any surface restoration or environmental remediation. Offshore it is about $750,000.00 to P&A a well (depending on water depth) and about $2,5mm to decommission a platform.
As to her costs, she has an AFE to tell her what they are. Ms, Web, are the proposed AFE costs in line with the OK average, or higher or lower? I know some real shallow wells can be P&A for around $6K.
Buddy, If Ms. Web has a 10% interest and she is responsible for her portion of plugging the well, does she not also have a 10% interest in the salvage of the surface equipment ? I was thinking that might defray her costs.
Dear Bob,
That is correct and is accounted for in the AFE (or has on every AFE for P&A that I have seen).
Thanks for all of the input. AFE is under $50,000 depth under 13,000. Seems to include environmental restoration. We're definitely not interested in taking over the well.
My husband asked me to call the company and ask them if we had any options; what would happen if we did not sign the AFE. It's been about a month, since I first asked the question and talked to someone yesterday who actually seemed sincere in saying that they are looking into it trying to figure something out.
So typically on an AFE, if you don't sign you loose your interest? Or if they get a majority to sign then everyone still has to pay, unless someone is willing to take over you interest?
Found the JOA that people we bought from had signed...looks like only option is to take over the well.
Guess we'll end up paying the $5,000.
Dear Buddy; thank you! I am still learning the ins and outs. I will be sure to set aside money for a rework/s and eventual P&A.
Buddy Cotten said:
Dear Bob,
That is correct and is accounted for in the AFE (or has on every AFE for P&A that I have seen).
Buddy
BBA-UT