I diligently updated the address for the trust which holds the rights, and got the first check in December for about $60. That doesn’t seem correct?
I also consulted an attorney and neither of us could find a lease? So I’m just confused A.) why the payment is so low and B.) how the operator is operating?
I’ve requested account statements/copy of the lease from the company but they flatly refuse.
The well was drilled in 2007, so is fairly old and production may have stopped. The OK Tax site lists it as shut in, so the amount you received could have been a final payment. The original royalty may have been at 1/8th which was common back then. You may have had a very small percentage of the well bore ownership. You could ask the operator if they have plans to open the well back up.
How do you I got about getting a copy of the lease from the operator?
The operator that is listed on that website is old, however we never received payments from them either, despite the fact the well was producing about 17000mcf until last year.
I have the original lease from 1975. It’s an undivided interest in 1/8th of gross proceeds on 40 mineral acres.
This well is still in active production according to data from the Oklahoma Corporation Commission. It’s still producing about $6000 in gas a month.
The operator finally responded with an opinion title that was written before the well was completed putting our interest at 1/16th of 40 mineral acres of a 640 acre section, amounting to about 0.19% interest.
I can’t find any basis for this in the records for that section from LeFlore county. The original mineral deed from the 60s was undivided and fee-simple. and it has remained that way. I’ve hired an attorney to do an opinion of title from scratch.
@tim_dowd perhaps you could answer my question. If this is the only gas well in this section, and the well sits on the 40 mineral acres I own, how is it the Royalty Interest is divided between 640 acres? Are royalties split between all mineral rights owners in the section, even if they don’t participate in the lease?
The OTC says that the well ceased production in 2011 (If we are looking at the same Nixon 1-8-see picture above) . Gas wells are frequently spaced at 640 acres (depending upon their depth) The decimal amount that goes with the royalty of the well is calculated by the Net acres/actual spacing x royalty x % perforations in the section.
Your net acres could be either 1/16 of 40 acres which is 2.5 acres, or 1/8th of 40 acres which is 5 acres. Depends upon what the title chain says. Leasing title opinions are not always correct. Or I am a bit confused by your first statement (“rather than the 40 acres it sits on”). Do you have wellbore rights only or do you have mineral rights? Those are different. The title chain should clarify. You may have an Over Riding Royalty Interest instead of a Mineral interest. The ORRI comes out of the Working Interest ownership and once the well is done and the lease no longer held, the ORRI is also done.
Here is the history of the well filings. 1073 are operator changes.
Leases do not show net acres, only gross. So you own an interest in the 40.00 acre tract, not 100% of the 40 acre tract. The formula to determine your decimal interest, based on the above information would be:
1/16 of 40.00 divided by 640.00 times 0.125 (1/8th royalty) or 0.0004882. Your 1/16th of 40.00 acres
is 2.50 acres.
And yes, all other parties that own minerals in the 640.00 acre section share proportionately in the entire
production from the section.
I believe there may be another well in this section, also operated by Oxley Energy, called the Reed 4-8. You should be getting royalties off of this well too. If not, you need to contact them.
While OTC lists the well as shut in, OCC has reported production each year, and the operator turned over account statements to me yesterday showing the well is still very much in production. The operator has simply been voiding the checks each month, despite having an accurate mailing address for the trust which held the deed.
On the account statements my decimal interest is listed at 0.0038074 in royalty (R)
Most wells are spaced at 640 acres, however the form 1000 and completion document for this well is devoid of any spacing information. The operator says they don’t have any documentation to support the spacing. Wells in neighboring sections are spaced significantly tighter than 640 acres. There is no pooling order for this well either.
I’ve consulted an O&G attorney in that county who today got started on a title opinion. She agrees though that it looks like I own 5 gross acres. That’s 1/8th royalty interest in 40 acres. We have the original lease signed back in the 70s, and all the following assignments. By our math, my interest should be 0.0078125, or double what it is currently.
So the well is listed as shut-in even though it isn’t. The company refused to turn over documents without an attorney getting involved. All checks in the last 6 years have been voided, save for the one in December 2023.
My attorney got the original title opinion they used in 2007 to justify the current royalty interests and it’s comically bad. Among other errors, It appears the firm which did the work confused the legal description of a lease in a different section with ours, and simply decided to split my interest in half rather than reconcile the difference.
We’re going to submit the new title opinion to OCC.
That one sounds complicated! Good for you in tracking all the information down. The OCC does not generallly get involved with correcting royalty payments, but you can send the title information by Certified Mail return receipt to to the operator and demand payment and interest.
The producing formation was spaced 640 acres in Order 316999, dated 9/22/87. The unit was pooled under Order 317131, dated 9/24/87. I don’t know if your interest is subject to the pooling or not.
And to try and help you a little bit with nomenclature, if you own a 1/8th “interest” in a 40 gross acre tract, you own 5.00 “net” acres. The lease which you are probably subject to, has a 1/8th “royalty”.
You are correct in that 5/640= 0.0078125. However, now you need to multiply that by the royalty percentage set forth in your lease or if your interest was pooled, by the election made under the pooling.
M_Barnes is correct that the OCC doesn’t care about the title opinion as that is not under their jurisdiction.
Good Luck getting your interested straightened out.
