Case CD 2022-001125, has paragraph 4 “Relief Sought.” I know that if elected Royalty Interest, one can’t come back in future wells with working interest.
Can one come back in with working-interest if they change the well type (future wells as multi-lateral, horizontal wells)? Is this why they put this paragraph in?
Here are the sentences in the paragraph:
“…The Applicant shall request at the hearing that the order provide that any owner electing an alternative to participation in the well drilled thereunder shall be deemed to have relinquished all of its working interest and right to drill in the unit and common sources of supply named herein as to such well and any wells drilled subsequent thereto. In addition, the Applicant may propose that the order to issue in this cause provide a method for proposal of subsequent wells, including multiunit horizontal wells; and, for response to that proposal by owners who elect to participate in the initial well…”
Each pooling order has its own language which would apply to each case. Some operators do not want to be changing working interest owners, others do not mind. Working interest is not generally for the average mineral owner with no experience in the business. You need deep pockets for many decades, a good oil and gas attorney and accountant, insurance, etc.
Thanks for your note. I’m electing royalty, so I’m not worried about getting working interest in future on this section. I’m wanting to understand the intent/wording of this particular Relief Clause. It seems “odd” to me.
Got call back from landman on this pooling. He explained to me that this paragraph is from lawyer so everyone understands that those that elect royalty, can’t have working interests in future wells, multi-laterals, or horizontal wells in this unit. I asked if they are planning multi-laterals or horizontal wells. He said nope. Lawyer has it in there, “just in case.”
I usually pick the highest royalty and that has the lowest bonus. In the big scheme of things, the higher royalty usually far outweighs the different in bonus over the life of the well. If the well fails, then I lose, but usually I get much more in revenue in the long run.