We recently received notification of two cases before the Oklahoma Corp Commission for “Relief Sought: Horizontal Drilling and Spacing Units” and another one for “Relief Sought: Multiunit Horizontal Well.” Section 35, T1N, R2W Garvin County
Can anyone explain what these requests are and what they indicate? Bottom line, does it appear Continental Resources is likely to drill in this section soon of Garvin County?
Thank you.
You have a well there which is proven or producing products and most likely is or approaching the age where it’s now more financially and economical to drill more wells in its area, and most likely will have an effect on the one well. I have a similar case that’s been going on for nearly nine months now, so hang tough, you’ll be getting offers from mineral buyers seeking to make a profit. I’m getting offers all the time, they started at six thousand now they’re at ten five, so tempting but after taxes I’m only getting middle of eight so it’s not really a fair price compared to what I’ll make after they drill.
Thanks. It’s not my land or rights, but I doubt the owner has any interest in selling at this time. I’ll let him know the notices are promising but it sit tight and keep his fingers crossed.
Remember that you will pay regular income taxes on the royalties and generally capital gains tax rates are a less percentage than regular income tax rates. I’m not suggesting one way or another as that is everyone’s personal situation decision.
And savvy mineral owners also apply for the 15% depletion credit on the royalties. So factor that in.
Martha, would you explain what this 15% depletion credit is, it appears I’m not too savvy. Not asking for legal advice.
Better to ask your accountant! Just like you can depreciate a tractor or building or equipment, oil and gas production is a depreciating asset. You can take a federal depletion credit of 15% against your taxes under the right conditions. My accountant has been doing it for years for us. You may be able to take a state credit as well.
I am not an accountant but you can go to irs.gov and search for Publication 525 (2022) and see the royalty depletion rules on page 17.
Thanks Martha, I will see what he recommends.
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