Linda, as Charles mentioned there are two XTO wells near you one has done over 100k bbl and the other 92.5k bbl in 3 1/2 years. I find it amazing they did so well with only 11 and 6 frack stages respectively and only using 20/40 sand, no ceramic so they were probably pretty cheap wells. I think the area may be a bit better than these wells indicate, although I would regard these wells as solidly viable commercially. 20% royalty is reasonable and not exceptional anymore and I would require at least that much for mine. I believe that you could ask as much as $2,000 per acre bonus. If it were mine I would think it was worth at least that much, considering that the cheap wells have done pretty well. You may have to let your lease expire so you can negotiate as a truly free agent. I think in a toplease that the mineral owner is not in their strongest position because the lessee isn’t worried about the immediate loss of the mineral acres, the lessee has time to try gain before your acres hit the market.
Thanks, R W, Great info. My Dad was a landman with Shell Oil and Amerada Hess back in the day when I was young and knew it all, but instead should have been listing.
You are welcome Linda. I believe that Amerada Hess drilled our first well, the Angus Kennedy back in 1958. Linda, I think your next lease is going to be the last before your minerals get drilled, keep that in mind while negotiating. This isn’t the old days when we leased 5 times with no drilling, this is for keeps.
How would you file a complaint against the Oil Company for dragging their feet regarding title issues? In the division order letter they said they would contact us within a week if there was a problem. After 3 months we had to call them because they never contacted us regarding any problems. They seem to have a problem returning calls.
Kathleen, your lease will not expire as to the minerals under a producing well. Kathleen, I have never seen a law that says the operator must pay royalty, only law that they owe interest on payments past due. Theoretically they could never pay you but in practice after 5 years they would owe more in royalty and interest than the well has produced and at that point an enterprising lawyer would take your case on a contingent basis.
Once you return the executed lease you become in effect a business partner of the operator, although an extremely junior and virtually silent one. Simce you are in business with the operator, it all boils down to a business dispute over money and the only place that can help you is the courts. There is no state or federal agency that will help, other than the courts. If you take them to court and win, they pay you and they still hold your lease until there is no more production and the attempts to get more production cease.
Many mineral owners do not realize that they no longer own the oil, not even a tiny bit of it once the lessee gets production from the minerals, the minerals are held by production and the operator only owes you the payment of the royalty interest from the sale of the minerals.
I have heard from people here that after their minerals were being produced and sold for more than a year that only when they inquired of the operator were they informed that they needed to perform a probate to receive royalty payments, so it’s important to know that you have no impediments to receiving your royalty. If there is any defect in your title they operator could use it as an excuse to not pay and not pay interest. I would say that the interest due on past due payments probably wouldn’t make the operator wince until they were more than a year past due because of how the interest is assessed. 1 month past 150 days after first sales is only 1.5%, 2 months late is 3% for the 1st months production and 1.5% second months production and so on. Kathleen, I hope your title is in order. In my opinion, it’s ok to pester the operator for your past due royalty, because even if they are annoyed, what will they do? Not pay you? How would that differ from what is happening now? I hope they pay you soon.
Kathleen:
Unfortuanately, I don’t think any rules are in the books regarding time allowed for title research. I have suffered through the same matter several years ago and these companies seem to take their take but title issues are a very important matter and if a mistake is made, the oil company will feel the effects down the road. I do agree that 3 months seems like a long time but all you can do is try and contact this company. On the other hand, if the company is selling oil from a lease, there are rules in place as to the timelime for payment or be penalized with an interest.
Thanks much for the advice, Charles. I’m just concerned cause our lease would be up for renewal in May so it would probably be a good thing if this was resolved by then. Cheers, KJ
Kathleen:
If this company is serious about drilling rights or rights to participate, they will have this resolved prior to the lease expiration. If these minerals are in hot area, you may be contacted by another company in regards to top leasing.
Daren, The lease will remain in effect. the Heirs will not have to sign a new lease. They may be asked to sign a “ratification” which is acknowledgement of the prior lease. This is for the tract that contains the well. If the lessor that died had more land and they did not have a well on the other tracts then the heirs can sign a new lease when the old lease expires.
But…wells hold the minerals and their are no new leases.
I’m curious about the statement below…my question is this…the lease will not expire while a well is producing…what about if the people or person who signed that lease is/are dead??? Does the lease stay in effect or does the person or persons who inherit the mineral rights have to sign a new lease???
Daren:
The lease will remain in effect and the heir or heirs will inherit the minerals and will be paid the royalties. No new lease will have to be signed (I think). They will have to sign a new lease additional minerals are leased (in the event the original lease had a pugh clause).
My thanks to all for your informative responses to my question. I quess in this case “patience is a virtue”.
Thank you for your answers…although I was hoping it would be a different answer…I don’t think my Mother signed the best lease but I know why she did…no oil company had leased the land for going on twenty years so I think she signed the first chance she had…we do have three wells now though so I guess I can’t complain…thanks again.
Good morning Iam writing in regards to my mineral acres at 157N, 98W sect 9 in williams county. There has been a well producing on the property ( Cass 1-9H) for the past 9 months albeit sparodically due to what I see on the GIS site of which Iam a basic subscriber and also checks owed. My question is I see that Continental Resources are drilling 4 ea confidential wells on sect 4 0f 157N, 98W. I can only assume that thesewell will be drilling under sect 4 and 9 as they are on a 1280 spacing. Iam I correct in assuming this and also will this contribute to the amount of revenue due me as a mineral holder of the property? I would also like to ask if the oil companies have to report monthly production figures at the end of each month? The reason I ask is that the CASS -1-9H (21178) hasnt reported production figures for the last 2 months. Can you shed some light on the matter? Thank you for all your help Bob
Robert, your producing well looks like it got a pump installed in Sept and has steadied down. 6150 bbl in Oct. 5837bbl in Nov, should be pretty steady for awhile, but the operator controls the valve and he can do what he wants.
As for those four permitted wells by Continental, I think two would go south and be yours and two would go north because they have section 33 in their name
I hope they go ahead and drill those for you because I think that would be as much drilling as you are likely to see for a long time. If you would, when you’re done with the rig, send it my way, I have a few spacings that could use a second well.
Robert, once again I left something out, the NDIC sometimes takes a week to get all of the reports up. If I had to guess December numbers for your well should be up by next wednesday.
robert:
Looking at the GIS MAP, it appears Continental has permits to drill 2 wells; the Blaine 3-33H (24817) and the Cass 2-4H (24820). Sections 4 & 9 make up a 1280 spacing unit so I will guess that these two wells will be drilled in 4 & 9. I am not sure if these oil companies are required to post monthly production but I think they are. There could be several reasons for no production such as downhole work such as installing a downhole pump, etc. Looks like you will be getting some new production on your mineral area in the future.
Thanks to both of you for your insight. I would be totally in the dark if it werent for you guys.
Regards
Bob
Robert, 3,642 bbl for December.
They came in with a 1500 offering. I had seen the ranges anywhere between 1500 and 2250 so I countered with 2250 and they jumped back with the 2k. It seems they are being fair to me.