Do you always get division orders for an allocation well?
FYI apparently not because we got paid and never received any division papers.
Maybe some legal eagles will weigh in on whether cashing a royalty check is a de facto signature on a division order: “If the lessor accepts royalty from a non-consent allocation well, he or she will probably be bound to both the allocation unit and its formula for distribution of revenue…” [see p.28, VI. WAIVER]
lsgm, I would have said a royalty owner would have to sign a division order before they got paid on an allocation well. Otherwise there is no documentation, or confirmation, between the operator and lessor on the royalty owner’s share of the unit.
If you don’t mind saying, is the well you are talking about in Washington County and was it a situation where you were already in a producing unit that got included in a larger allocation unit?
The only WC well I see that was permitted as an allocation well is the Wildhorse Fincher and I thought they ended up filing a unit designation making it a pooled unit?
Dusty1 that is the well I am talking about. They went across three pools for the Fincher well. (Winklemann, Fincher, and McAurthur)
AJ11 We received a division order on the original well but nothing on the allocation. We are on the direct deposit program so it just showed up? Not sure what if anything we can do about it at this point. L
lsgm, thanks for pinning that down. Can you tell from the payments you’ve gotten how Wildhorse is dividing the royalty on production coming from the Fincher?
Like you said, the plat WH filed with their permit for the Fincher covered those three units and totaled 1200+ acres, and apparently was going to handle the whole thing on some allocation basis. But in the Washington County deed records WH recently recorded what they called the First Amended Unit Designation Fincher Unit that made it look like the Fincher was a normal pooled unit that included only a total of 365.77 acres.
Which unit were you in originally and do you know if the horizontal leg of the Fincher actually crosses your land?
Sorry I can’t help with anything more definitive. Sounds like you need to consult an oil and gas attorney.
Dusty1 We are in the Winkelmann pool. They told us at the start that payments would be made by the % of footage. I see 1000 ft goes to Winkelmann pool 1601 to McAurthur and 4392 to Fincher so I figure the Winklemann % is around 14%. Based on the numbers it seems like I have it figured close to right. The well is has to be an allocation well for us to have been paid. The well sits on a Winklemann well pool property. Not a Fincher pool property.
AJ11 We have an gas attorney. He has dealt with most all of the paperwork so far. Like I said this payment just showed up Friday. We felt that based on the timeline on the original well we would have received division orders in Jan. We did not.
Then ended up adding in the McAurtur unit later. By way of some waiver to extent the lateral.
I missed the timeline. Sounds like you are in good hands. Please share how it all works out.
Just an FYI the income statement had the 2 wells both on it. They were itemized separately but then totaled together at the end.
Thanks for giving us that detail. What you described about the percentage division between the three units being based on the feet of lateral crossing each one is the only way I could picture that working. They are calling it an allocation well but it is really more like what Enervest has called coop wells.
The kind of allocation wells everybody is doing out in the Permian generally divides up production based on how many feet of the lateral actually cross a royalty owners specific acreage compared to the total lateral length not just the length within unit lines.
Appreciate if you could also share how much total production Wildhorse showed for the Fincher in those statements you got. Unless it was just added nothing is shown for it on RRC or CONG yet.
After the message I sent yesterday I found some initial production reports for the Fincher.
Wildhorse reported to RRC that in October it produced and sold 6568 MCF and produced 536 bbls of condensate with sales of 377 bbls. I’m assuming that was just a few days production during that first month.
The Comptroller’s site CONG shows the October production as 6312 but has the sales at 4858 MCF. It shows the same 377 bbls of condensate sold like RRC.
CONG also shows November production of 136835 MCF but sales of 103013 MCF, and on condensate appears to say sales volume totaled 12,534 bbls that was spread between four different purchasers.
If I’m interpreting those numbers right it indicates the well averaged about 4.5 MMCF/day with 400+BPD of condensate but there is no way to know if those November numbers were for a full month of normalized flow.