I have fractional mineral interests in Section 7 5N 61W. The rights are leased to Bonanza Creek. All of Section 7 was pooled last year, and that seems to be working out OK. Yesterday, the COGCC website showed that Bonanza Creek has applied for permits to drill 4 wells in Section 6. The COGCC map shows the planned wells heading south from the pads in the northern part of Section 6 down to the southern part of Section 7. I think I understand the basics of drilling and shared production within a pooled unit. What happens when wells are drilled to cross unit boundaries? Thank you for any help.
R. Schmidt
Wells may be drilled down from a pad in one unit, but not be opened up to produce until reaching into the neighbor unit. The COGCC rules protect your interest against unlawful drainage at the boundary between units.
John B. Gustavson
Certified Minerals Appraiser
Thank you for your reply, John. It sounds like COGCC rules will prevent uncompensated drainage in this circumstance. Now I need to learn about unlawful drainage and figure out how part of Section 6 and the pooled Section 7 fit together as a production unit. I appreciate your help.
Richard Schmidt
John, I have mineral interests in Section 6 and 7. Would I receive royalty payments for both Sections for these wells?
Hi David: Check with the operators, who hold your specific leases. They know best and are obligated to answer you ... in their good time.
I attach the Application for Permit which Bonanza Creek filed last week. It is impressive that they want to drill four 2-mile long wells in Sections 6 and 7. Cross your fingers and hope that they will drill (when oil reaches $70/bbl).
John
I attach the Application for Permit which Bonanza Creek filed last week. It is impressive that they want to drill four 2-mile long wells in Sections 6 and 7. Cross your fingers and hope that they will drill (when oil reaches $70/bbl).
John
1174-BonanzaCreek2milepermits.pdf (202 KB)
I also attach the map on which you can see the already producing horizontal wells (purple), planned (green) and the four for which the Permit is Pending (light blue).
John
1173-BonanzaPronghorn.docx (106 KB)
Thanks for all, John. Have seen both. Have fingers crossed. Will check with Bonanza Creek to see how Sections 6 and 7 fit together.
Richard
Thank you John for the information. Most helpful. I will contact Bonanza Creek on my royalty payment question for Section 6 and 7.
David
John B Gustavson said:
I also attach the map on which you can see the already producing horizontal wells (purple), planned (green) and the four for which the Permit is Pending (light blue).
John
Thank you John. As another Mineral Owner in Sec 6 & 7, thank you for the updates and attachments.
John,
I have an offer from a company to buy our mineral interest in Sec 6 &7. We have 75 net acres. Their offer is about $2,260 per acre. Seems kind of low with all the acitivty in those sections. Not ready to sell just yet, but wanted any thoughts that you might have. Thank you,
I have not studied the recent Comp Sales in that area in detail, but it sounds a little low. Try to contact Atomic Capital in Houston. They specifically look at operator drilling activities and/or plans and include those factors in their offers.
If in doubt as a landowner, you can always consider just selling a 50% undivided interest. Personally, I think that we are in for months, if not years of oil prices at the current level.
John
Thank you John for your comments.