Yes I am stumped too? After excavation, rig, transport costs etc. my friends entire check from the leasing co. was $45! He inhearited land and mineral rights in OK after his mother passed 12 years ago. Apparently he was recieving minimal bonus payments ($200 yr) and aprox $150 checks monthly for oil taken until the leasing co. claimed to halt oil production and are now only taking gas? He has never signed a lease agreement and knows very little of this process until I told him something sounds way wrong here! I am impatiently awaiting documents so I can figure out whats going on here and what I can do about it.
Can anyone tell me if this sounds normal???
It does not sound normal to me. My experience has been a bonus is payed up front for the right to explore & then you would get paid a royalty % if production occurs. Production in paying quantities would hold the lease until such production ceases. So if he inherited the property with a lease in effect and it is still paying royalties, the lease is still in effect. I think you would be best to start by getting a copy of the lease & then go from there. Without that you won’t have a clue. Or maybe he has a working interest, etc. There are others on this site that would know more about that.
Still waiting for more info. How many net acres. What size spacing ?
He was receiving bonuses and royalties until the leasing co. Claimed to cease oil production about a year ago and now they are pumping from a natural gas well on his property apparently. Now he is only recievng payment of this end cost after transport of natural gas…Seriously, one check was close to 115,000 and after all of the above mentioned costs plus some, his net check ammounted to 82.83!!! He is very very naive to all of this. I am waiting on documents still however I am positive that he does own the mineral rights…as to percentage, snail mail is killing me. Does anyone have a guess as to what the heck is going on here?
Gas is really low right now. The deductions for oil can be very small. The deductions for gas can be huge if you are paying for separating the gas, filter the gas , dehydrate the gas, compress the gas, transporting the gas, and the lease terms may allow deductions for marketing the gas. I’d be tempted to ignore gas myself, I mean how much could it matter if it sells for less than $5 for 1,000 cubic feet? The answer is it does matter if you are paying all charges. I think you have found the answer. Your check stub may list all applicable charges.
Perhaps the fact that you have no interest in the minerals or royalty would account for you not knowing the facts of the situation. You may also be confusing bonus payments with royalty payments. The lands are leased and held by production by a Lease created by the OCC in a forced pooling situation, wherein the lessor gets a small royalty percentage until a well pays out the costs of drilling, testing, completing and operating in addition to a “risk charge”. Every time there is a new well drilled, the process begins again for that well.
Begin your search on the OCC website and go through all of the hearing files associated with the section/s under which the minerals lie. In the Exhibits of unleased and unknown owners, you will probably find the owners mother’s name included.