Just got Division Orders on well. I’m not sure how to communicate my question not knowing correct description. But Oil company drilled horizontally on section next to ours. It came across on our section and went 3/4 mile I’m told. Division Orders have our 2 sections at 640 acres each. Then the Allocation Factor is 40.090144% (our section) Allocation Factor is 59.909856% (other section) How do we figure decimal interest? We have 40 acres royalty, 3/16 interest. Just want to make sure the oil company has correct amount before signing. I know how to figure on just one section. Thanks for advice.
What state and county are you in? I can answer for Oklahoma, but Texas is slightly different but similar.
Oklahoma /Dewey County
You will only get royalties on the perforations that belong to your mineral ownership. So for Oklahoma, the equation is generally:
net acres/actual spacing acres x royalty x percent perforations in your section.
If you have acreage in the northern tier of sections (1-6) or the western tier (6,7,18,19,30,31), those sections are quite often not the 640 acres that the spacing order says. They are adjusted for the curvature of the earth, so you have to use the actual acres. Many of the division order have the corrected acreage on them, but if they do not, you can look it up on the Bureau of Land Management website. Home - BLM GLO Records Use the Search Documents, LSR, OKLAHOMA, county, township range meridian, and Master Title Plat. Zoom in for your section. Also, rivers can change the acreage as well. The operator will have any new survey, so I ask for a copy for my records.
Note: your lease may have said 40 acres, but that is the gross acreage, not the net. You may need to contact the division order analyst to see what net they are using. You can back it out if you have the other parts of the equation.
Come back and I will walk you through it if is does not match your DO. I always make sure that the company is using the NADOA format and not an extensive DO that tries to change the terms of the lease.
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Thank you. Your formula matched DO #’s. I have another question.
We have royalty in Okla/Major county. We’ve never got paid for NGL’S in Section 1/20/16 when other wells in the area paid for NGL’S. Operator is Comanche.
The NGLs are taken out at the plant. It would depend upon which reservoir your well was in and how wet the gas was or if they reported them as NGLs. Sometimes, you can get a hint from your statements. If the gas price is larger than the posted Henry Hub price by a good bit, then the NGLs are hiding in the gas price and you are getting paid for them. I noticed that quite a few of my operators did not report them until recently.
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Interesting. That’s what Comanche told us it was explained to him that the price they paid was less than what Chesapeake, Newfield, Devon, Marathon and Tapstone and they all paid for NGL’s. Thank you for your help!
Each company has their own contracts with the pipelines, so their prices can vary widely.
What well are you talking about and in what section, township and range?
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Section 8 /20/16 well #1 sondra Major county
The Ok tax site is only listing oil and gas and not plant products. The well is listed as an oil well, so the gas is probably associated gas. Wells that are gas wells with condensate are more likely to have the NGLs. Whether they list them or not often depends upon how they sell the product. Before or after the plant strips them out. Think dairy. Milk prices sold right from the cow or different products sold after they are processed.
https://otcportal.tax.ok.gov/gpx/gp_displayPublicPUNListSearchDownload.php
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