I'm a royalty owner in Kay County, Oklahoma on long-standing producing leases in S/2 of Section 9, Township 27 North, Range 5 East of Kay County...passed down by father and grandfather. My grandfather was a big oilman in the 20's, 30's, and 40's, and he and his wife were instrumental in the development of Kay County through various philanthropic endeavors. But that heritage is very likely to be soon taken away by a unitization and flood/tertiary recovery effort of thousands of acres. Those thousands of acres are mostly non-producing. My dilemma is that Section 9 has producing leases, and Chaparral Energy seeks to "absorb" that production by its unitization. Hallco Petroleum, the operator of the producing leases has 100% working interest in the leases. Hallco Petroleum first proposed its own flood unit of its immediate acreage to extend production, and all royalty owners within those leases would receive their respective mineral interests as normal, if the OCC approves the Hallco flood unit. However, Chaparral Energy, in its own massive flood-unititization plan, named "The Burbank Kay County Unit" presumes to override Hallco's leases and is applying to the OCC NOW to do so. The affected, current royalty owners within those producing leases will see their royalties evaporate as they disseminate to the hundreds of royalty owners in the non-producing leases when Chaparral's unit is approved. I say "when" because it sounds almost like a fait accompli in speaking to the Hallco people. This is distressing to a point of breakdown. Does anyone have any answers as to what may be done to halt this incursion into our leases? I've already written the OCC judge assigned to the CD docket case, and he replied he'd submit my concern to the "file." I'm a relative newbie, but at least I'm not sitting down and taking it like some relatives who also have royalties under the same lease. Additional info on the Kay County Group Discussion. Help, please??
Ed,
You are on the right track notifying the OCC. Conservation of oil and gas is in the OCC mandate and one of its primary responsibilities. However, the Commissioners are political appointees and so serve at the pleasure of the state legislature. Get your family and neighbors together and demand a meeting with your representative. You all may have votes. The OCC and companies do not.
On a personal opinion note, some of the mineral owners are receiving royalties from PROVEN RESERVES. It doesn't seem fair that your PROVEN RESERVES should be thrown into a pot by the OCC with RESOURCES of others with out fair compensation methods to the owners of the PROVEN RESERVES. Consequently, I would get the producing property stake holders together and demand that your representative support fairness with the OCC.
Halco's engineers and experts have the PROVEN RESERVE information available and should be invited to provide that info to your representative in your support. Consider forming a citizen's group and using Halco information, hire a lawyer to appear on the group's behalf for the OCC. Use your voting power. The OCC can not ignore it.
Thank you sir for your reply - my reply is a bit delayed due to some developments in my situation. I've located old division orders and discovered that, other than the working interest operator, I and one other royalty owner have the majority interests, on the order of 100 to 1000 times greater than the other 100 odd royalty owners involved. Their small percentages would explain why I've run up against surprising ambivalence, and ignorance in the matter. The big losers in this, should we not prevail, would be Hallco Petroleum, myself, and another majority interest owner. So there is no "group" to form to protest, much less to vote. On top of that, I am a non-resident of Oklahoma...many states over, and the hearings, delays, etc, make it unlikely I could be at any OCC meeting. I have emailed different parties: the hearing judge at the OCC, the Commissioner herself, even the White House. The main points in our favor are the technical unfeasibility of Chaparral's plan for a variety of reasons, along with serious environmental concerns.
A followup question to one of your points...is there any legal precedent that would support a separate lawsuit against a unitizing company's failure to justly compensate royalty owners for loss of royalties as an outcome of a new unit? Is it just a forgone conclusion that in unitizing or pooling some royalty owners will lose bigtime, and that's that? Do the big losers in unitizing have legal recourse in such a case?
Like you, I have little hope up against big companies with political pull in a political world. I assume the OCC is as political as any political party. Does the little guy stand a chance in Oklahoma, and with the OCC?
There is a member of MRF by the name of RW Kennedy. He has been through a lot with his ownership and vagaries of oil and gas law. Another is Mineral Joe. They have learned many things the hard way. I suggest you "friend' them and see what they say. I'm much more of a grass roots manager with geology, engineering etc. Which is why I think you have a good chance following the compromise of PROVEN RESERVES approach. If you get a good mineral lawyer to help you, he or she will know what I'm talking about. Good Luck and I think you and your fellow large mineral owner will prevail no matter where you live.
Ed Krane said:
Thank you sir for your reply - my reply is a bit delayed due to some developments in my situation. I've located old division orders and discovered that, other than the working interest operator, I and one other royalty owner have the majority interests, on the order of 100 to 1000 times greater than the other 100 odd royalty owners involved. Their small percentages would explain why I've run up against surprising ambivalence, and ignorance in the matter. The big losers in this, should we not prevail, would be Hallco Petroleum, myself, and another majority interest owner. So there is no "group" to form to protest, much less to vote. On top of that, I am a non-resident of Oklahoma...many states over, and the hearings, delays, etc, make it unlikely I could be at any OCC meeting. I have emailed different parties: the hearing judge at the OCC, the Commissioner herself, even the White House. The main points in our favor are the technical unfeasibility of Chaparral's plan for a variety of reasons, along with serious environmental concerns.
A followup question to one of your points...is there any legal precedent that would support a separate lawsuit against a unitizing company's failure to justly compensate royalty owners for loss of royalties as an outcome of a new unit? Is it just a forgone conclusion that in unitizing or pooling some royalty owners will lose bigtime, and that's that? Do the big losers in unitizing have legal recourse in such a case?
Like you, I have little hope up against big companies with political pull in a political world. I assume the OCC is as political as any political party. Does the little guy stand a chance in Oklahoma, and with the OCC?
Ed, I do have experience with the occ. I have testified numerous times...but usually for the oil company. I do NOT work for any of the above noted oil companies. If you will send me the case no./cause cd no. I will look it up and give you my opinion and I do know an attorney that does a lot of occ work if we need him. You can email or fax me anything you feel would be pertinent to the case.
email: [email protected]
phone: 405-238-0116
Fax: 405-207-9094
It sounds like you may also want to coordinate your efforts with Hallco since you both have a vested interest in the issue. What has their response been to what is happening? That is pretty bad if the state regulatory agency is basically overruling existing leases / operations for the benefit of someone who has done NOTHING yet for production (except legal maneuvering). Sounds more like organized crime / racketeering / shakedowns than logical oil and gas development.
Yes Sir, I feel the very same way. I am even more livid than 2 years ago when this all began. I am unable to coordinate anything with Hallco, inasmuch as the case is still before the OCC, and correspondence with Hallco might constitute a “conflict of interest.” Both lawyers made a big deal about ‘conflict of interest’ so I’ve had to refrain from speaking to Hallco. The “overruling” is called “forced unitization” meaning if Chaparral can convince the OCC that their unit proposal is “in the general good,” then anyone who may suffer a downside to their action will be screwed…without compensation for losses. And they know full well the average mineral owner cannot afford an attorney to sue for losses. In my case, the losses will be massive. As the economy further digresses into recession, royalty owners are increasingly living off their royalty revenues; they are dependent upon them. The unethical actions of a predatory company hurt real people, in real ways. They may succeed in convincing the courts the legal merits of their “needs,” but the predatory nature of their action is a prime example of how our nation has been ravaged by unethical companies.
Kitchen said:
It sounds like you may also want to coordinate your efforts with Hallco since you both have a vested interest in the issue. What has their response been to what is happening? That is pretty bad if the state regulatory agency is basically overruling existing leases / operations for the benefit of someone who has done NOTHING yet for production (except legal maneuvering). Sounds more like organized crime / racketeering / shakedowns than logical oil and gas development.