You need to post all of the related terms in you lease to get feedback. Be careful that there may be more than one related paragraph. The words net proceeds would be after all kinds of costs. The question of market value depends on the other language in the sentence and paragraph. Is there any difference between the wording related to gas vs oil? Market value will not be purely WTI as there are other factors. Does the lease specify where the market value is determined - at the wellhead or at the point of sale by the operator or point of sale be an affiliate?
I came across this law review article on allocation wells written by Ernest E. Smith: https://www.oilandgaslawyerblog.com/files/2016/07/Applying-Familiar…
He is an authority in Texas oil and gas law.
TennisDaze,
I would certainly agree that this could have much less than desirable ramifications for lessors, especially if we are looking at old HBP at 1/8 royalty. But, in my opinion, I think Mr. Smith’s legal reasoning seems sound. Especially the rights granted to lessees under a valid lease to drill a horizontal across lease lines if they own interest in both tracts. To me that makes sense. Do you know of opposing legal arguments against Mr. Smith’s argument, or can point me in the right direction to find them? I certainly see the equitable argument to be made.
Respectfully,
Mike
TennisDaze,
Thank you. I will certainly dig into what they have. Ron “Sickem” Nickum- I did some land work for him several years ago when I lived in the panhandle.
Thanks again.
Mike
Ernest Smith is well known regarding oil and gas law. He has created the theory of using allocation wells to get around pooling. This is very destructive to the long-term interests of mineral owners. There are many oil and gas attorneys who greatly disagree with Smith’s position on this issue. Theory is not the same as law. The University Land System and GLO have presented statements before the state legislature that allocation wells have the potential of costing the state millions of dollars in lost revenues in being able to get bonuses for new leases, providing increased royalty rates and better terms such as payment of cost-free royalties.
Robert Sullivan – We have 1200 nma unleased in Block 59 about 3 miles west-southwest of your tract in Block 58. Which company leased your acreage. And, if you don’t mind, for how much per nma.
Does anyone know the going rate for water for the oil companies? I am interested in having a water well drilled but don’t know what the rate per barrel is at this time. I would appreciate all assistance in this matter. Needing all the help I can get.
Thanks;
Louise
M.A. Smith- I’ll be happy to share the info via message.
Louise,
Tried to send you a reply about your frac water sales water well on your
page…but it never printed there. Call me at my home number and I’ll tell you what I tried to send you.
Lawrence, I had the same thing happen to me. I posted some pictures and they just disappeared, never posted.
Double K Drilling acquires Desta Drilling from Noble Energy Double K Drilling of Jacksboro has acquired Desta Drilling from Houston-based Noble Energy. The Midland Reporter Telegram said the acquisition quadrupled the fleet of Double K to 20 rigs by adding Desta’s 15 rigs. Kirk Wade, vice president at Double K, said the acquisition also included Desta’s building, shop, 28 acres of land, and equipment such as pumps, drill pipe and blowout preventers. (Read more…) //////////////////////////////////// I noticed Clayton Williams kept a few of those Chinese shallow drilling rigs because he has one now drilling on the south side of Interstate 10 west of Fort Stockton where he owns the land around Belden prison farm. He owns that whole Belden valley with the pecan orchards and farms. Haven’t seen where he is going to continue drilling under a new company name in Reeves county yet…but I know he has landmen scouting in Culberson county.
Is it common for Apache or others to drill and frack a well without the infrastructure in place to support production? They have drilled two holes on the family property and more are permitted and approved. However, we are still awaiting word on pipeline and processing unit construction. I am assuming the processing unit must be in place to produce and the pipeline must be in place to transport from the processing unit.
Well if I could escape town without family in tow, I would be there in a heartbeat.
Again, more good information provided by you.
Apache has rented 16 acres for the processing plant, but don’t think they have done anything with it. I think they have specified the location of another one on our half section where they have drilled one hole and will likely drill another.
Thank you, Wade!
That is a great article and the maps share a lot of detail.
F100owner, no, it’s quite common when wildcatting and developing
an oil and gas field to drill the wells and TRUCK the liquids away to be sold
for however long it takes to get the infrastructure built to that point.
F100owner…come ahead! What’s stopping you? And don’t forget, as they used to say about the ‘drags’ (hot rods)…BRING YOUR CAMERA! and record a memory video to watch with your family years from now.
They still flare the gas until the gas pipeline is available, but in the case
of ‘wet gas’ they’ll set in 4 stages of skid mounted recompressors and
a cryo tower to liquify the natural gas on site and truck it out as liquid.
Apache is building cryo plants all over that area to liquify gas and knock
out products to be trucked while they continue apace building their
30 inch gas and crude oil gathering lines system. It’s amazing how fast the entire area is building.
Thanks for the information Verhalen Lawrence. I am thinking to linear. Had forgotten that trucking oil (not sure about gas) is probably still the norm for transit. I am also guessing there is no rush to get our hydrocarbons out of the ground until they transport/process efficiently, which is what the pipeline offers. I wish I could make a run back down to Toyah, I hear they are still drilling on our land. Love to see that stuff.
Noble Permian is building a consolidated gas plant East of Hwy 17 extended 1 and 1/2 miles east of the north side of box around Block 13
Section 182 CR330 makes. There is a cluster of 4 horizontal wells
there less than 50 feet apart…the cluster is called the Jalapeno complex, and the consolidated plant is on the west side of the Jalapeno
cluster well. They’ve already started setting pressure vessels and a precast concrete building for a control room.
Yes, great article and maps. Thank you! But - LOL! Our property is just on the wrong side of the Alpine High approximate boundary - and I do mean “just”. Apache’s boundary line follows our western boundary. One side, gas and oil. Other side, no gas and oil. OK, I know that isn’t the way it really works but it did cause much rueful laughter at this end.
Wade, et al Reeves County members, Good map. Most of that 30 inch gas gathering line and the 5 CPFs (consolidated processing facilities) parallel
FM2903 from Balmorhea to Toyah. Between the Dakota CPF and Cheyenne CPF county road 336 crosses the 30 inch line on the west side of FM2903 then goes east to Hwy 17 where it becomes CR112/Barilla road. It continues across to State Hwy 285 where it splits
to service the new gas plant being built by Energas on the east side of
Hwy 285 and the other part goes to the Waha Hub at Coyanosa. There
are 4 30 inch pipeline rights of way parallelling CR336/112 Barilla road.
One is Apache’s, one is Primexx’s, one is Noble Permian’s, and one will be Oxy’s…but they are joining common carrier lines through there.