I received a letter from Stephens & Johnson stating they are in the process of separating the Plains Track which is paid on a unit basis and they now want to pay each track by revenue interest rather than by unit share. They are asking me to send them information that would help them to calculate my decimal interest in each tract.
I'm completely lost on this one, never encountered this before and I am not a pro at understanding all the ins and outs of the oil and gas business. I inherited this royalty interest so I'm at a loss as to where I can find the information they are requesting. Any help would sure be appreciated and thank you!!
Laurie Tucker
When an operator forms a unit, they combine the tracts of all the mineral owners over a wide area that comprises the reservoir that they want to operate. Sometimes there were originally different operators spread out over the area. One unit operator is chosen to run all the operations point forward. Original spacing may have been 40 acres, or 80 acres or 640 acres. Think square or rectangular pancakes composed of little tracts made up from folks that had 2 acres, 5 acres, 57 acres, etc. When they combine each of the spacing units into the large "unit", it will cross those spacing units and may be hundreds of acres or thousands of acres in size now.
Originally, your royalty interest would be your net acres/spacing unit X royalty % (3/16ths, 1/5th or whatever you had.) You (or your ancestor) only got paid on one well originally. When the unit was made, your net acres are thrown in with everyone elses and you get paid on net acres/unit size X royalty %, but you get paid on every well that is in the unit. Often, they drill more wells in the Unit in between the old wells. Think teeny piece of very large irregular shaped pancake with lots of wells in it.
What they are doing now is going back to the original royalty interest. If you are in the best part of the field and there are active wells, then this may be a good thing for you since you will get paid on the active wells that belong to your tract. However, if you are on the lower part of the structure and the wells have watered out, you will not get paid on any wells. It is a natural part of oil or gas fields ultimate field life.
What they want from you is a description of your mineral acreage which should be on a lease that your ancestor had or on the mineral deed that is filed in the county courthouse for Carter. If you are lucky, you have that info in your files. If not, you may have to do some detective work. (actually, I am a little surprised that they don't have the info, but if they bought it from someone else, "stuff gets lost"). When did you inherit? If after 1991, some counties have all the info online. If before, you may have to go to the courthouse to find it.