Hi. I’ve noticed this past year my checks, which aren’t big being with, are getting smaller and smaller even though gas and oil prices are crazy expensive. Is anyone else getting less and less? I’m still confused as to how a lease just goes on forever without ever being reworked when new oil companies take over. I guess they must sneak in some wording that the lease is never ending and non-negotiable. I inherited the mineral rights from my dad who got them from his mom. The last lease I could find was from the 70’s that my dad signed, but I guess they just go on forever regardless in the change of oil companies drilling. The oil company at the time my dad signed the lease in the 70’s managed to get him to sign something with the royalties being a pathetic minimal amount. I feel like after I see all the deductions and what I get is a joke and a complete rip off, but I guess there isn’t anything I can do to challenge a huge oil company. I have noticed my checks are getting smaller and less frequent they could be completely ripping me off and I would never know.
I’m just frustrated and feel so lost when it comes to this stuff. Sherry
Not knowing where you are in Pittsburg, it is hard to explain for your particular location, but here is the general explanation.
Every well has a decline curve that is natural. Think of a balloon starting out really large with a pin prick hole. Over time the pressure and the volume of air in the balloon decrease. The barrels of oil or cubic feet of gas volumes just decrease in a fairly predictable fashion.
The next component is the prices of oil and natural gas. Both were very high last year and especially in 2022 due to the war in Ukraine and recovery from Covid increasing demand. Natural gas prices are very low this year, so if you have a gas well, then that is the majority of your explanation. Declining volumes with declining prices gives lower royalties. The good news is that many experts predict higher natural gas prices next year.
If your dad signed a lease back in the 70’s, then it is likely that it was at a 1/8th (12.5%) royalty or perhaps a 3/16ths (18.75%). Depending upon the wording in the lease, then yes, the lease can hold you for many, many years because it is a valid contract and quite common for the terms that were normal back in the signing day. No sneaking words in, just a valid contract that still holds under the terms no matter who the operator is. We may not like it, but many of us are held by leases like that. Newer leases have more sophisticated terms that can be negotiated.
If it makes you feel any better, I have a well that is about 100 years old and still producing. Over time, we have been quite blessed by it and are grateful for even the low royalties now.
If you want to share the section, township and range and well name, I can show you the decline of your well over time and that will help you visualize it.
You can change the minimum royalty payment with a simple letter. You may have it set at $100. You can get it reset at $25 so you get more frequent checks.
Here is a little information about the mineral rights in Pittsburg County if that helps.
Here is a little info off of paper work and lease I’m finding.
Townsite Addition #22, Pittsburg County, OK, Section 24-3N-13E: Lots #25 = 10.01 ac, Lot #26 = 10.00 ac. Also a tract in Lots 23 & 24 which I guess is 3.5 ac.
From what I’m seeing Tract A: All of lots 25 and 26 and part of 23 and 24 in Townsite addition No.22 Pittsburg County, OK.
Tract B: SW 1/4 SE 1/4 of section 18, Township 3 North Range 14 East of the Indian Base and Meridan, Pittsburg County, OK
I’m trying to look up the lease information to see if it has it written out better.
Looks like the first set is in 24-3N-13E and the townsite is Kiowa. There is only one old dry hole in the far SE corner of the section outside of the townsite. No wells in the townsite
The second one may be additional lots in the townsite. No wells.
Tract B in SW4 SE4 18-3N-14E is bounded by E Garfield Rd and Buff Rd and is in between Kiowa and the town of Pittsburg. Mustang Fuel has the Buela Mae 1 gas well. It has produced over 2.6 BCF of gas and has a bit more left. Spacing is 640 acres.
