I just noticed in the NDIC upcoming Nov. 21 hearing docket, that HRC has plans to combine 1280 acre spacings into 2560 spacings to drill multiple wells on the new spacings.
How will this affect royalties? I currently have some acres in a 1280 spacing and I'm assuming by going to 2560, I in theory will get half as much royalty in the future.
I appreciate any thoughts.
Ed,
I'm in that same group....T157 R103 S15 with Halcon (HRC).
DJ
Ed,
Take a hard look at the details of increasing spacing. I'm involved in an area where the spacing on NEW wells in SOME zones were all that was effected. The original wells at 1280 were not changed and the royalty on those wells remained at the same NRI decimal.
There are some obvious production efficiencies to larger units as the operators get better at enhancing the permeability and holding more inventory. The advantages to the mineral owner may grow due to more drilling but that is not a guarantee. Economic uncertainties are too large for any prediction to be relied upon. Mineral owners should look at the prospective revenue from production coming in over at least a 60 year period and know that it will come in fits and starts depending on the operators' variable business plans.
I don't object to larger units in the Bakken but do object to changing the size of producing units. I strongly object to increasing unit size and not drilling. If a larger unit is established, it should be subject o cancelation if a successful well is not completed within a certain period of time.
Thanks Gary, I appreciate the input.
HRC has several applications to create new spacing's in several Bakken fields in northern Williams county. We have a permit on this spacing that expires in late December; if they get approval from NDIC, my guess is this permit will be cancelled or resurveyed.
When G3 was still operating in our well they proposed 7 wells in my 1280 spacing back in June of this year. Of course HRC bought G3/Georesources since then and they have different plans. Currently they (HRC) are drilling a multi-well site a couple miles south and west of our spacing. I'm assuming this is their plan for the larger spacing's.
I have mineral rights above you in 11 and 2 they keep saying we are next to drill but nothing yet .but at one time said they were leaving the area.
I called NDIC and asked about the 2560 spacing. I also have interest in the area with HRC. I was told the 2560 is needed to pick up the 500 ft setback along the section lines. Anything drilled outside the setback would remain a 1280 spacing unit. So with that said, yes we will get our royalty percentages cut in half only on the 500 ft setback area. They said either they space it this way or leave the oil on the setback in the ground. I would like to have another opinion on this. Anyone else on this board know anymore about this?
I hope that is true. My interest is in 157-100, section 2, which is part of the Section 2-11, 1280 spacing in the Dublin field. Back in June, when GeoResources/G3), was the operator, they purposed drilling 7 more wells in that 1280 spacing, with no word of a 2560 spacing; (I like that idea better).
I think I will contact the NDIC also, just so they know the mineral owners are a little upset with the 2560 spacing.
I am in the same area as you are and have the same concerns. 157-100-24 and 157-99-7+ 18/19 Have you read this article?http://oilpatchdispatch.areavoices.com/2013/11/10/mineral-owners-wary-of-mega-unit-plan/
Also please post what you hear from NDIC. Thank you.
Ed Ryen said:
I hope that is true. My interest is in 157-100, section 2, which is part of the Section 2-11, 1280 spacing in the Dublin field. Back in June, when GeoResources/G3), was the operator, they purposed drilling 7 more wells in that 1280 spacing, with no word of a 2560 spacing; (I like that idea better).
I think I will contact the NDIC also, just so they know the mineral owners are a little upset with the 2560 spacing.
I sent emails to both the ND Oil & Gas division as well as the NDIC. The NDIC forwarded the email I sent to them to the NDOG. Bethany Kadrmas of the NDOG responded to my email stating they will take my concerns into account at the hearing and requested I send her my mailing address for the record. She also encouraged me to attend the hearing on Nov. 21.
Also, somehow HRC got word of my concern at called me at noon today to explain what they are looking at in the 2560 spacing.
I will start a new discussion with the HRC explanation.
Kevin said:
Also please post what you hear from NDIC. Thank you.
Ed Ryen said:I hope that is true. My interest is in 157-100, section 2, which is part of the Section 2-11, 1280 spacing in the Dublin field. Back in June, when GeoResources/G3), was the operator, they purposed drilling 7 more wells in that 1280 spacing, with no word of a 2560 spacing; (I like that idea better).
I think I will contact the NDIC also, just so they know the mineral owners are a little upset with the 2560 spacing.