I am a land owner with an existing SWD that is used by the producer on my lease. What is a typical landowner fee for another oil producer to begin using my SWD?
What does your existing lease say about your SWD? Do you receive any payments specifically for using it (sometimes an annual fee or fee by number of barrels disposed)? Does your lease allow neighboring leases or even other operators to use your SWD commercially?
I don’t currently receive any payment for use. It is only used by the producer who drilled wells on the property and then converted this one to SWD. We now have a request from another producer who would bring water from someone else’s lease to dispose in our SWD. The producer on my lease would structure the agreement with a fee to him and to me, the landowner. What is reasonable for my landowner fee?
This is a great question because you don’t know what the company is charging or whether they will charge more in the future. With that in mind you may want to consider taking a percentage of what the company charges. You should involve a Kansas attorney to draft the agreement.