Eagle Ford Shale Minerals Question

General Mineral Rights Discussion
2

Thank you Mr. Williams. I think they finished drilling but I am not sure how long it takes them to move it to production as you noted below. It is oil and leased through EOG. We do not really have any communications link and about the only way we learn anything is through a landman that sometimes provides info such as if one of our units is on or off the drilling schedule. We expect a number of additional wells on different tracts that have been pooled and this is the first experience. We have not received any other notices beyond when we signed off on some pooling agreements and our % interest was included there as I recall. Beyond the landman who has limited ability to really share any details, should we be able to gather better insight from EOG?

Thanks again - Rick

Cliff Williams said:

Mr. Skinner,

If the well was completed in December the considerations are as follows:

  1. A question is whether the operator completed drilling the well or actually completed everything required to begin production. The latter sometimes takes more time. If the well is in production; then,
  2. If you are in the “gas window” the well must be tied-in to the natural gas pipeline. If you are in the oil window then it just goes to the tanks.
  3. Hopefully, the division order title opinion has been completed and you should have received a copy of the “Division Order” or the calculated percentage of the production proceeds that you will receive; if so,
  4. The oil or gas produced in January will go into the tanks and the gatherer will calculate in February and the operator will have the January production payments sent to the landowners generally sometime in March. A two month lag is not uncommon.

Production info on the Tx RRC site can lag by several months and there is no set time they update their information making the RRC somewhat unreliable for monitoring the production and payments.

Typically, when I edit a lease for a landowner and represent a client and respond to oil and gas company I enter language into the oil and gas lease that states that you are entitled to the title opinion, that you have audit privileges and they have a 90 day window from initial production to pay you your royalty without the oil company incurring a penalty.

Feel free to contact me if you have further concerns or I can help you in any way.

Cliff Williams