I have a Working Interest in the Haynesville shale. Recently I became aware of two wells that were drilled in the section I have an interest in. I was not notified of the the wells and was not given the opportunity to participate. Once I learned of the wells, I sent a letter to the operator and informed them of my Working Interest. After 30 days I received a letter from the operator stating that I do have a working interest in the two wells. One well was drilled in 2014 and they offered to start paying my working interest share once the well paid out. The second well started producing January 2023. The operator sent me an AFE at the end of June with the dollar amount I would need to pay in order to participate in the second well.
I considered forwarding the funds requested by the operator, but recently I was told by a different operator that I may not need to pay the funds. I was told that since I was not notified and since it is already in production, I may not owe the funds and may just wait until the well pay out to receive my working interest share. This would be much like the first well in which the operator plans to pay my Working Interest Share once the well pays out.
Does anyone have knowledge of a situation such as this and now if I do owe funds if I wish to participate?
I am in Texas and Texas and Louisiana are quite different in a lot of respects; however, I do own some mineral acres and got very involved in the leasing activity back in our area in 2008-2015. With that said, I was told over and over again to never, never get involved in a working interest deal unless I have an expert team of accountants and a huge pot of money to invest. Oh, I forgot to mention a top of the line team of Oil and gas attorneys.
Good luck, these oil well guys are well prepared.
Mark75287,
Did you buy the working interest, or are you an unleased mineral owner? The latter in Louisiana is treated as working interest once the well(s) pay-out.
If you are the owner of a leasehold/working interest, then there are specific rules that apply to well/drilling notices from the operator, There are Louisiana statutes and case law in regard to this situation. Since you discovered the wells and seemingly not notified prior to drilling, then you may be able to elect to wait for payout on the well. However, payout is calculated differently for a working interest vs an unleased mineral owner. You may be well served to contact an attorney in Louisiana that specializes in oil and gas.
“I was not notified of the the wells and was not given the opportunity to participate.”
Were you findable? Meaning was there anything in the parish were the well was drilled that gave your current mailing address?
I’m assuming your interest is being held by an older lease since you didn’t know about these more recent wells - any agreements made regarding that lease may still be governing any new wells.
If there is no contractual relationship between you and the drilling operator and it is a compulsory unit then you will most likely fall under the Risk Fee Statute - La. R.S. 30:10(A)(2) - they are required to notify you by registered mail with the cost, etc and give you the option to participate.
You in turn are required to reply that you do want to participate in writing, registered mail, within 30 days. If you are deemed a non-participating WI owner you are subject to well payout and an additionaly 200% (100% for alternate well) penatly before you would begin to receive your share.
Within 90 calendar days after comletion of the unit well an operatory must send an intital report via certified mail - after establishment of production they must send quarterly reports - to owners who request such reports, in writing, by certified mail, and if the operator fails in this duty they shall forfeit the right to demand contribution.
It should be noted there is not a lot of case law in this area and what there is favors the drilling operator over the non-drilling operator - in fact the 5th circuit said any issues should be liberally interpruted in favor of the drilling operator in a fairly recent case.
This is merely a short summary of some of the considerations for a pretty complex legal situtation - You should definitely get a lawyer to help you navigate these issues.