Hi, I have a small interest in a few wells, I need advise on whether to participate in drilling, pooling or selling my interest. I am looking for someone with oil and gas expericance in AFE's, NRI and valuing my assets.
Bob,
What area are your minerals in? State / County, etc
Hi, Oil and gas, various Oklahoma counties. I need advise on whether to participate in drilling, pooling or selling my interest. I am looking for someone with oil and gas expericance in AFE's, NRI and valuing my assets.
Bob,
Your decisions rest with three main categories:
- The long term geologic potential (production potential and probability)
- Cash flow demands and constraints by needs from entities external to your wells,
- Your relative risk aversity.
Two of the three are in your control. the third takes an expert opinion based in science not hunches. If you are blessed with the science, the economics of the decision will be automatic. Recommendations made without all the legs of the three legged stool, are nothing more than guesses.
I've sent you a PM if you need any names of scientists or how to accomplish your goals once they are established
Gary L Hutchinson
Minerals Managment
Thanks you very much, we drilled the wells years ago and they were really good, now some plan on going back and fracking, I think the risk of obtaining good production is low, the price of oil is always a major issue, as well you know. I sent you a message, thanks very much, bob
Always know that if you elect to be a working interest and participate in the drilling of the well and something goes very wrong, the bills could bankrupt you.
Also, research the operator's name and see how many lawsuits they have been in.
If you want to invest, you could contact 2-3 geologists a pray their eyes get big when they see your opportunity.
Good luck, Bob Malone, Malone Petroleum Consulting
Bob is correct. One of the saddest stories we ever knew about were some neighbors who took the advice of one of the brothers and participated in an Amoco well back in about 1979 in Harrison County, Texas. To make a long story short, the well was a duster, and Amoco (who had every right to do so) ended up getting a judgement against the family for their portion of the costand selling the land at auction. These were all just working people with no expertise in oil and gas who truly lost the "family farm". Kathy
Ms Stephens recounts a story I've seen multiple times also in my 30 yrs. in this business. Working interests in oil and gas properties, in my informed opinion, should be left to those who understand every aspect of the risks - who can then go in with their eyes open.
Yes Mr. Dubose, after I wrote my note I saw I should have made it a little clearer. Amoco was leasing up a block. They offered the family an oil and gas lease and the one brother convinced the family to not accept a lease and participate in the well. Kathy
Thanks you very much for pointing that out.
Thank you for your thoughts
Thank you
Is there any way to contain the working interest in a LLC or other legal entity so the operator can't go after your personal assets?
Does the operator's insurance cover environmental damages like spills or pipeline ruptures?
Great point! I am protected, this could be a very dangerous play, as your saying.
yes, you can protect yourself by placing the interest in a LLC or Corporation. However, like the example above, what if the well has a cost overrun, but still could be a good well. Or, the well is producing, but you don't have a gas contract.
In those situations, its not a "walk away" situation. Its closer to having to keep throwing chips in the middle of the table to see what kind of hand you have.