I own minerals (currently leased) in Blaine s18 t16n r13w. I received a copy of a document today that is an application to establish a horizontal drilling and spacing unit and the applicant is not the company that I leased to. I am very new to this world and I have no idea what the paper that I am looking at means. Can anyone help?
Dear Mr Ross, the OCC controls the drilling and spacing unit which determines how many acres are assigned to each well that is permitted. Highmark has filed an application for spacing that will be heard on October 31st. In this application, their drilling unit is the governmental section (640 acres). Highmark has some money behind it and they have expanded their acreage position in the SCOOP and STACK. Anyone with a mineral interest or leasehold will be pooled together to form the working interests that will pay the cost of the well. Paloma Partners IV LLC, which holds your lease, is an investment fund investing money for others in the STACK amid other things. They are not the operator but rather a non-operating working interest owner. Highmark is the operator and will make the decisions about the well even though they do not own 100% of it.
Dear Mr Ross, you can search the internet or go to the OCC website and find the Oklahoma Royalty Owners Handbook. This publication from the OCC can answer many of your basic questions about how everything works. The operator, Highmark, will be issuing the royalty checks based upon the deal you have with Paloma.
Mr Weeks,
Thank you very much for that explanation. I think what threw me off was that I received a lease offer from Highmark after I signed my lease with Paloma. I will definitely be checking into the Royalty Owners Handbook since I have a lot to to learn and what I do know has basically come from internet search.
This might be a dummy question, but if they are applying for this acreage pool would I be safe to assume that the motivation would be tapping a well in the near future?
Dear Mr Ross,
You are correct. I would guess that Highmark controls a majority of the acreage in this section and they want to get the remainder through the pooling. Paloma wants to participate and they want a well drilled, too. Your location is good. The application is only good for a limited time and if they don't drill a well then they lose all the money that they have invested so far. Highmark would not know about your lease with Paloma until it got recorded at the courthouse.