I currently own mineral rights to 52.66 acres in Ellis county Oklahoma 22n,26w section 27.southwest energy has made an offer to purchase these rights. they sent the following in an email.Essentially - the wells that are currently producing are spaced at 640 acres (the full amount of acreage in section 27). So the wells are producing from all minerals under section 27. Meaning that anything that happens with the well(plugging, etc) it will effect all minerals in this section. Minerals located in one part of the section versus another part of the section will all be treated the same to the operator. There is no chance of something happening to one part of the section and not the other. If the operator was to come through and plug one or both of the wells it will effect all mineral owners within the section the same. could someone please explain this to me?I have two active wells and two plugged and abandoned wells.
You are in a 640 acre drilling and spacing unit established by the Oklahoma Corporation Commission. Extremely common. More common than not. All mineral owners in section 27 share. So, it makes no difference where the well is located in Section 27, or where it is producing from. All owner share in the production. This is done to prevent too many wells drilled in a section, which is inefficient.
so what you are saying is the royalty checks I receive may be from a well on another persons well?
property is what I meant.
All the mineral owners in that section share in any well drilled in the 640 acres in a reservoir that is spaced at 640 acres. Some shallow reservoirs may be spaced at 80 acres for vertical wells. (In that case, you must be in the spaced area to get paid). Your share of the royalties from any 640 spaced well would be : net acres/spaced acres x royalty. If a well goes into another section, then the equation is : net acres/spaced acres x royalty x %perforations on your section.
Any plugged wells have already given up their reserves. Do not be concerned about them.
Any future horizontal wells in the spaced reservoirs would give you future royalties. That is what a buying company wants-your current royalties and your future royalties. You may only have two producing wells now, but you may have more. Melbourne has increased density cases in sections near you right now. When those increased density cases get posted, tons of letters to buy go out to surrounding sections hoping that folks will sell. The buyers frequently use selective “negative” reasons in order to convince you to sell. They probably would not mention the reasons why you should hang on…
Thank you Mrs Barnes for your reply.that clears it up for me now.I have no intention to sell.