Sec 28, 7N, 5W

Where can I find out the amount of production of an old well located in Sec. 28,7N,5W? My parents leased their mineral rights many years ago and have not received any royalties in quite some time. How long can the Oil Company keep these acres leased with little or no activity? What does the Oil Company have to do to keep these mineral rights leased after the initial time period indicated in the terms of the lease. What constitutes a producing well? Thanks, Roy

As long as the well is producing something that can be sold, whether oil or gas, the company that leased the well holds the rights in what is called Held by Production or HBP. The companies are supposed to release the acreage if no production is coming from it after the initial term of the lease.

Do you have any copies of the Division Orders your parents received in conjunction with whatever payments they received? You would have to go to the Oklahoma Corporation Web site to find out about any natural gas production. You would have to go the the Tax commision to find out about any oil production.

As for how long can a company hold a lease? As long as they can keep a well producing something and that something need not be very much at all. You are in one of the active areas of the Woodford play. I would guess that whoever is holding the lease are trying to keep it legal until they can get another operator interested and make a deal with them to drill another well, maybe horizontal.

If the well is still producing your problem is back royalty payments which may not be very much. If the well is not producing and you can prove it you may need to get a lawyer to write the appropriate demand letters to get the lease released as required by law.

Now this last part is nasty. If the well is still producing anything and the lease is still lawfully HBP and the operators makes a deal with some other operator to drill a Woodford horizontal well you are stuck with the royalty of your parents lease. The going rate in this area now is 3/16 or 18.75%. It may be that your parents royalty was 1/8 or 12.5%. That is the royalty the lease will pay you, 12.5%, with a successful well in a new zone.

Sort of tough stuff but that is the way it is.

The last production looks like Aug 11 . What they have to do is in the shut in royalty clause of you lease. Do not cash any checks from this well that might come, until you see if they have lived up to the shut in clause , or it will reinstate the lease if they have failed .

Roy, I think your parents should thank you.

You can find information about the wells on OCC.

Two wells were on the section, one was dry (The Nabors)

The operational well, (the Moore) was drilled around 1985, no gas just oil.

The well transferred ownership in 2008 and again in 2010. I doubt that many oil wells would produce for 20 plus years a few gas wells might but this one was oil only.

We can tell that someone is interested in keeping the rights alive as they keep selling it, but not paying royalties.

Based on what little I have seen I would go to a lawyer quickly if more than a acre is involved. I noticed the spacing was 80 acre spacing. I can't really advise you, but if your parents aren't leasing the rights, they are likely getting the short end of the stick for sure.

The link to OCC is below, just put in the section and township and search.

http://www.occpermit.com/WellBrowse/Home.aspx

Roy, I just noticed that Don and Ron posted to you. They know a lot, pay close attention to what Ron said.

I wish you luck.

My Mother passed away and my Father is transfering the ownership to me. It is 20 acres and we have been receiving offers to purchase the ownership of the mineral rights. I am trying to figure out just what they have here. I am trying to find out the status of the lease etc. Thanks for the response.

Gale Williams said:

Roy, I think your parents should thank you.

You can find information about the wells on OCC.

Two wells were on the section, one was dry (The Nabors)

The operational well, (the Moore) was drilled around 1985, no gas just oil.

The well transferred ownership in 2008 and again in 2010. I doubt that many oil wells would produce for 20 plus years a few gas wells might but this one was oil only.

We can tell that someone is interested in keeping the rights alive as they keep selling it, but not paying royalties.

Based on what little I have seen I would go to a lawyer quickly if more than a acre is involved. I noticed the spacing was 80 acre spacing. I can't really advise you, but if your parents aren't leasing the rights, they are likely getting the short end of the stick for sure.

The link to OCC is below, just put in the section and township and search.

http://www.occpermit.com/WellBrowse/Home.aspx


Thank you for your response...Was the last production Aug. 2011
Ron McKenzie said:

The last production looks like Aug 11 . What they have to do is in the shut in royalty clause of you lease. Do not cash any checks from this well that might come, until you see if they have lived up to the shut in clause , or it will reinstate the lease if they have failed .

Thank you for your response

Don Underwood said:

As long as the well is producing something that can be sold, whether oil or gas, the company that leased the well holds the rights in what is called Held by Production or HBP. The companies are supposed to release the acreage if no production is coming from it after the initial term of the lease.

Do you have any copies of the Division Orders your parents received in conjunction with whatever payments they received? You would have to go to the Oklahoma Corporation Web site to find out about any natural gas production. You would have to go the the Tax commision to find out about any oil production.

As for how long can a company hold a lease? As long as they can keep a well producing something and that something need not be very much at all. You are in one of the active areas of the Woodford play. I would guess that whoever is holding the lease are trying to keep it legal until they can get another operator interested and make a deal with them to drill another well, maybe horizontal.

If the well is still producing your problem is back royalty payments which may not be very much. If the well is not producing and you can prove it you may need to get a lawyer to write the appropriate demand letters to get the lease released as required by law.

Now this last part is nasty. If the well is still producing anything and the lease is still lawfully HBP and the operators makes a deal with some other operator to drill a Woodford horizontal well you are stuck with the royalty of your parents lease. The going rate in this area now is 3/16 or 18.75%. It may be that your parents royalty was 1/8 or 12.5%. That is the royalty the lease will pay you, 12.5%, with a successful well in a new zone.

Sort of tough stuff but that is the way it is.

That was Aug 2011 on last production.

thanks

Ron McKenzie said:

That was Aug 2011 on last production.

Roy-With that Aug 2011 last production date you should inquire about a release of the lease and get some sort of contact going about that. When you do make the inquiry make sure it is a Registered Letter retun receipt requested. That establishes a date that you, the mineral owner, made a lawful inquiry and could come in very handy later on.

There is a possibility that the operator is just holding off releasing the lease in hope of getting another operator interested in drilling a well on the lease. If that gets started before the old operator releases the lease it could get very complex and likely you will end up with the royalty your parents had.

There may be some terms in the lease that your parents signed that has a clause pretaining to how long the operator had after last production, Aug 2011, to release the lease. If you can take a look at the lease and see if there is a clause defining how long the operator has to release the lease it would be worth your while.

My Dad had an interest in a tract they just finished drilling a new well on . The interest was held by production, the Co. that held it quit paying for over a year. Then one day he got a check . They had shut the well in but did not pay the rent called for in the lease. At first they would not release They did release and paid his legal fees. He let them keep the lease on the shallow formation after they gave him a higher royalty interest and they released the deeper. Later they drilled another well in the shallow formation. If he had cashed the late check they sent for production it would have perpetuated the lease which would not have been good for his case. Twenty years later I got to make a deal on the new well with another Co. And there is still a little production from the shallow formation.

28 7N 5W is not held. At least that's what I assume since Jackfork leased it from me for Continental.

Tom

we have 10 acres of minerals in this section between the moore and nabors wells and the oil company that owns the nabor well we re lease are deep minerals to them there looking at going in and using the existing wellbore and redrilling the well deeper and horizontal. we havent heard were there at in this project but im sure it going to happen before long.

Nick Someone told you they were going to use the wellbore of the nabor well to drill a horizontal ?

Paying a delay rental can hold a tract. I said earlier, 28 7N 5W where I own surface and some minerals was leased by Continental last year. That includes the Moore well.

Tom Moore