Hello All,
I’d like to know if anyone in the forum has been dealing with Magnolia Oil & Gas in Fayette County, TX,as it pertains to the expansion of units under their Biss-Bissonnette Co-Op agreement. I haven’t been able to really understand what benefits might accrue if the agreementt is signed and what, if any, negative repercussions might come from not signing. It looks like the agreement would add units to the existing ones, diluting the royalties received but potentially increasing the production of the entire set of units. I am not a lawyer and found the agreement as well as its cover letter a bit turgid.
Thank you for any tips on interpreting this stuff.
First off, welcome to this site.
I do not know what the agreement states, but the general premise seems to be eerily to one that I signed years ago. ie, changing royalties, gaining units, etc.
In my case, I signed away 3/4 of my percentage without realizing it. I was told that they needed to do a ‘water flood’ procedure and if it worked it would be beneficial to all involved. Well, it did not work and my percentages on 5 wells did not go back to the original percentages. I lost big time.
My checks went from $400-700 dollars a month to about $100-150 a month. My last check was $16 (sixteen) dollars.
Be careful. Get a qualified lawyer. Pray you did the right thing for you.
Good luck.
Would recommend that you get a good oil and gas attorney to walk you through the agreement. Never sign anything that you do not understand. There are several good TX attorneys listed in the Directories tab above. Some waterfloods work out very well and some do not.
Gryphon77, having the agreement reviewed by an attorney familiar with O&G is definetly logical, but I don’t think comparing this type allocation unit to one formed for a waterflood project that failed is valid. Being included in a co-op unit can be very good news.
The concept of allocation wells is controversial. There’s currently a case involing them in the Texas Supreme Court. But in the past few years Magnolia has formed lots of co-op units and completed many great wells on that basis, probably more in Washington County than Fayette.
The downside to not signing the co-op agreement is that you won’t share in the production from wells drilled in the co-op unit. Unless you own a very large percentage of one of the units being combined to form the co-op I doubt you can stop the process from moving forward, or change much in the proposed co-op agreement. You should be able to assure that nothing in the agreement amends the major provisions of your original lease. If your lease included a depth limitation, a no surface use clause or other special provisions, you should be able to make clear those provisions still apply under the new agreement. I’d ask to see the method Magnolia used to establish the percentage share each original unit that’s being combined will receive of production from wells drilled in the co-op unit and the number of wells Magnolia is programming to drill there.
