Rick and Sandra, Like Virginia on Stephens Co pg. commented “If they perforate in the first section with only 6 perforation and the 2nd section with 12 perforation, then the 2nd 640 would get 50% more than the 1st section.” Exceptions? Yes, a lot.
Sandra, This will help. http://digitalprairie.ok.gov/utils/getfile/collection/stgovpub/id/2…
Scenario 1
640 X 640 x .1875 (the 3/16 RI) = .1875 That is the interest in the well
100 barrels x 30 days = 3000 barrels x $95 per barrel $285000.
285000 x .1875 = $53437.50
Scenario 2
South well 4000 x 9000 gets .555556 of the production
North well 5000 x 9000 gets .444444 of the production
640 X 640 x .1875 (the 3/16 RI) = .1875 x .44444 = .0833333 interest in the well
100 barrels x 30 days = 3000 barrels x $95 per barrel $285000.
285000 x .0833333 = $23750
What you did not account for is the well in Scenario 1 should still have 4000’ of lateral either way.
So the well with 9000’ “should” with all things being equal produce 2.25 times the production of the 4000’ lateral well.
Plug those numbers in the above and you get
225 barrels x 30 days = 6750 barrels x $95 per barrel $641250
641250 x .0833333 = $53437.48
Pretty much the same thing
Dijensen, No OCC action or well action in the recent months on your requested blocks. Looks like some leasing going in 1 & 17-16N-3W over the last 18 months so maybe something will happen soon. Also leasing in 35-17N-2W, so keep your ears open.
Logan: Devon Energy Production Co. LP; Reupert No. 1-29MH Well; NW1/4 SE1/4 SE1/4 SE1/4 (SL) of 20-19N-02W; 406 barrels oil per day, 1,043,000 cu-ft gas per day; TD 10,395.
Virginia,
For it to work perfectly, the formations under the two sections would have to be exactly the same and any wells under both would have to be drilled perfectly the same and completed exactly the same.
Under that theory it would be impossible for one section to have a 400 bpd well and the other 100bdp. Assuming the formation was the same and the well drilled/completed the same way. Is the section with 5000’ produced 400bpd (8 barrels per 100’) then the section with 4000’ should produce 320 bpd.
While the argument the could easily be valid that the two sections could have differences in production rates due to the geology, those differences should not be 3.2 times low to high.
Your argument could be applied across a single section just as easily. With a 4000’ lateral in a section, how can you say the north half is producing the same as the south half? Or go even further and break it down to every 500’ and then we are back to 7-8 Vertical wells. At 3 million each would not be profitable to drill so your rights would never even be produced. Can you imagine impact on the land, roads, and environment? A century ago that is what we had, rows and rows of wells. Much of the role of the OCC is Conservation and protection of the environment. But it also has a responsibility to protect the rights of all parties involved.
I agree the concept is not perfect. There is plenty of testimony from professionals during the application process to try to make it fair and the best for all involved.
Always remember. As a mineral owner you have the right to produce your own hydrocarbons from the minerals you own. But it is a very expensive and difficult process most of us do not have the money to bankroll or the knowledge to ensure it happens. Also it is very rare or (almost impossible) to find those who one 100% of their minerals when we are talking 640 acre tracts in our area. Less difficult when you get down to 160 or 80 acre units. So then you have to do like the oil companies, and lease those co-owners in the unit.
I’m doing just that right now in a 120 acre tract. There is little doubt in my mind that I’ll get more of an education from it than money in my pocket. Honestly, I hope to break even in anything above what I see from our family’s ownership percentage. The other owners are taking ZERO risk.
Some mineral owners consider the oil companies the enemy. I agree the much of the criticism is deserved but I’d say the majority of it is because of a lack of knowledge of the subject on the mineral owners’ part. I consider the operators a partner. But like any other partner, I have to learn the business at hand to make sure I get a fair shake.
Sandra,
It is by statute. Look up O.S. § 87.8 for the full text but this pretty much covers it.
The allocation factor for each affected unit shall be determined by dividing the length of the completion interval located within the affected unit by the entire length of the completion interval in the subject multiunit horizontal well. The Commission shall have the authority to adjust the allocation factors, based upon reasonable testimony and evidence presented to the Commission, if necessary to prevent waste and adequately protect the correlative rights of the owners of the oil and gas rights in each of the affected units.
Martha,
I will agree that their are a lot of exceptions to my example. Let’s face facts, this law wasn’t wrote for the mineral owners to be able to figure out. It was wrote so the oil companies can get more investors and they can get the pay back a lot faster. This way the oil companies can hold 1280A instead of 640 and save about 1/2 million in bonus from leases that are about to run out. The set up cost for drilling these wells are a lot and by being able to drill a lot far, it cuts the cost down. Plus it gives the oil companies a lot more leased land to borrow money one.
Thank you for putting the url on this site so each of us can under stand it a lot better. But, I’m sure that the mineral/land owner will never be able to figure out what their fair share is. Must have been wrote by Chesapeake who is getting their tail sue off by DFW, TX people.
Anyone have info on these 3 areas in Logan County? I would appreciate updated info if anyone has any. Tks
Section 17(S/E 4) Twnship 16North Range 3 West
Section 35 (E/2 N/W &W/2 NE/4) Twnshp 17 N, Range 2 West
Section 1 (N/E 4) Twnshp 16 N, Range 3 West
Rick,
Thank you so much for all the work you did on giving us to Scenario on how the multiunit production can work.
But, I have a question?
According to your scenario, you would have to own the hold 1280 A in order to benefit from it. But, it could be good for the investors and oil companies.
Now let’s say, I own 160 A mineral in the north well with 5000ft L and it came in at 400 bbd, but they are drill 9000 ft L and the 2nd section only would have came in at 100. I think I have just lost a lot.
I have a well that is in the middle of 2 good wells, each making at 400 + bbd and mine right in the middle making about 100 + bbd. I wish that well was on 1280 a, I would make a lot more, but my neighbors would be taking the cut.
I don’t think the mineral owners will make a lot more on this set up, but will lose bonus in the future. The oil companies and investors are the ones who are going to be making the money.
Yet I see where their maybe a lot more wells drilled, so we may be making 2 to 3 times more in the future from additional wells.
I may be looking at this wrong and would love to figure out why I can’t see the hold bright side.
Rick,
I will agree with everything that you have said. I hope you do good on your investment.
I am the surface & minerals owner on all my land. Plus I have lots more minerals only plus have invested in wells, only to make some of my money back. Sure didn’t get rich on it. More like the stock market, lose a few and gain a little.
I have had wonderful oil companies and some that are so bad they should go to hell when they leave this earth.
Oil companies are in the business to make money and the mineral owners are at a disadvantage as most don’t know what is taking place and don’t want to take the time to learn, so they get the bad end.
Ron Von Wilson, Uranium rich black shales of OK are shown on this map.
http://www.ogs.ou.edu/earthscience/intgeol/4paleosilurian.htm
Sandra,
You would have to have a master degree in math, accounting and law in order to figure it out. Oil companies don’t want you to know how to figure it. That is why they have the billions and mineral owners have Penney.
I am not sure where Parnon’s Great Salt Plains pipeline goes thru Logan County, or even if it only comes close, but here is a link showing a rough map. It was finished in Oct. 2012. That is followed by a link that lists all pipelines in and out of Cushing, that is pretty interesting. Cushing, incidentally, is the oldest oil storage location on the Planet Earth. Really. Ponca City, one of my favorite towns anywhere, is also a major storage location.
http://www.parnonholdings.com/wp-content/uploads/2011/12/Parnon-Gat…
Ronald,
The parnon pipeline has been moving oil for over a year. They are putting pipeline in about every 10 miles of less across northern Oklahoma as well as electric line to run the pumps. The pipe storage yard in Enid is probably about 2 acres full of pipe, then it gone and new loads are coming in. Lots of wells are still waiting to get on gas lines, etc. But, this is norm when oil is hot. In a few years, the boom will dry up and nothing will happen again.
Trains are moving lots of oil as they can move it faster, I think it’s about 10 miles per hour while pipeline oil moving is about 4 to 5 miles. I know the train that goes across my land used to run 17 trains a day and now they got approved to double that amount of runs. If you will go back to the 1950, 1980, etc. You will find this is all a repeat of the oil boom, nothing new. They just have improved how they get the oil out of the ground which happens about every 20 years. And in another 20 years, they will find more if we are lucky.
Woops that first link goes to Parnon dot com, it includes a link to apply for a job with Parnon.
Here is the link to the GREAT SALT PLAINS MAP.
Some natural gas in the (Anadarka) basin has unusually high helium content (greater than 0.3%). Helium is recovered from produced natural gas as a byproduct.
Hmmmm I wonder if this is why Okies talk kinda… you know… silly, sometimes?
Virginia, Devon reports show Logan Woodford to be a 50 year project. Marathon recently found the granite wash extends from the western OK granite wash east into Stephens Co. and Devon has found the Anadarko basin oil is migrating into Logan. Here is the reason: Continuous Petroleum Accumulation.
https://www.dmr.nd.gov/ndgs/newsletter/winter09/PDF/Bakken%20Petrol…
http://certmapper.cr.usgs.gov/data/noga95/prov58/text/prov58.pdf
Martha,
I’m sure that Devon will be in Logan Co for the next 50 year producing the wells they are drilling now. But, do you really think that oil drilling will stay at the rate it is now? I have seen lots of up and lots of lay off in oil business over the last 35 years. Lots of our good friends jobs were cut because the business slowed down. I’m not saying the oil wasn’t there, just a slow down in the need for it.
Regarding the Parnon pipeline, I would like to say, they did have some good people working the contracts and in the field. And they have came back after 1 year to close the wash out/ditches where the pipeline went. So, they are trying hard to work with the land owners. To bad all pipeline and oil companies aren’t like them.
This is Martha B from the geology side. I think you will see a big drilling push in the next five or so years until the de-spacings are all drilled out and then it will stabilize and eventually taper off. The game changer could be improved technology, replacement wells, more shale horizons, etc. which could stretch it out. I have sweated the last 35 years myself as the layoffs came and went. The ability for the export terminals to export gas will improve things as well, but those will be slow coming on line due to permits. Here’s to the glass half full for a while!