What is a wellbore only conveyance? I received an offer to purchase production/wellbore interest in Section 20 14N 10W Canadian County OK.
I am not familiar with this type of offer - is it common? Is it correct that this would apply to the three wells dug by Cimarex in 2017 that are currently producing, but no other future wells? Is it possible to add laterals to an existing wellbore?
A wellbore only conveyance is where the grantor or an oil company only transfers rights to a specific well, but no others. could be two or more wells, but no others. In other words, the grantor would deed the royalties or rights to the Jones No. 1 well, but not the Jones no.2 well or any future well that gets drilled. Could also go the other way, being the Jones No. 2 well or a future well, but not the Jones no. 1 well.
Not very common among mineral owners. Pretty common among sophisticated oil companies who produce from multiple wells.
As to the cimarex wells you’re speaking of, I would need a lot more information.
Typically, in a wellbore only conveyance, you cannot add a lateral or a horizontal well. But, it would depend on the language of the conveyance/deed/assignment.
Thank you for the information. I don’t yet have a detailed offer - expecting it this week - but can provide additional info regarding the three Cimarex wells if significant. They are all horizontal wells and run under sections 17 and 20.
If you are a royalty owner beware! A wellbore only conveyance is a conveyance of production only from a specific well. It does NOT carry with it any interest in the leasehold estate (the oil & gas lease). If you are a Lessor, this would be the same as a conveyance of your royalty interest ONLY as to production from the specific well. If they are wanting to purchase a wellbore interest in the entire Section, it could possibly lead to acquiring your royalty interest in the entire section! You would do yourself a big favor by having an oil & gas attorney review the conveyance. I would refer you to Hampton & Milligan in OKC. Great oil & gas attorneys.
This topic was automatically closed after 89 days. New replies are no longer allowed.