Audit of existing wells, production and compliance with lease

#1

My family, friends and I have some undivided mineral right interests in Reeves county. There are producing wells on this land. 3 oil companies are involved in this situation. We think that possibly we need someone to review our lease and make sure they are in compliance (they have not been) and audit some random pay stub remittance. Do any of you have a suggestion on whom to contact for this effort?

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#2

Hi Grace!

I suggest you contact Melody Martinez with Farmer’s National here in Fort Worth:

MMartinez@FarmersNational.com

817-884-4684

If they can’t help you, then she will probably know who to send you to.

Charles

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#3

Many thanks, Mr. Tooke. I will check with her at the beginning of the week on this subject. I appreciate your response!

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#4

You can do some auditing on your own. First, compare the oil production volumes each month to the volumes sold per RRC. If there is only gas, then you should be able to the mcf into the pipeline. If there is gas and liquid products, then the gas volume is most likely to be the dry gas volume at the plant tailgate and the product will be volume in gallons and a combined price of ethane, butane, propane, etc. Go to the Texas Comptroller CONG website to see the volumes and sales revenues reported to the State of Texas. No need to “log in” and just enter. Use the RRC lease id number (6 digits required so add a leading zero to the RRC 5 digit for oil wells and use the 6 digit number for gas wells) and the county and a range of dates.

Oil wells generally report the oil on oil side and gas on the gas side. Gas wells mostly report the gas and condensate (oil) on the gas side. Called Lease Drop - Oil and Lease Drop - Gas. See if the gross well sales compare to your check detail. You should be keeping track of the check detail monthly. If there are adjustments to sales revenues or volumes, then you put that back to the proper production month. For most people, this can be done on a spreadsheet with columns for gross well volumes, sales, severance taxes, etc and columns for your net share of each. You can set up the spreadsheet to automatically multiply your DOI in each well to see if the net numbers are correct.

The issue of whether your lease language adequately prevents transportation, processing and other costs from being charged is a legal question. This all takes time and effort, but once you get started and keep it up monthly, it gets easier.

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#5

Excellent summary right here.

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#6

Thank you so very much! I will have to read it several times. I really appreciate the details as I had no where to start!

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#7

Charles, how do i find the lease number? I have the API, the operator number, my owner number, the well number and the permit number. None of those work—most are too long. Thank you for your guidance. (Trying to check production reports)

Cindy

Cindy Frakes MA, CRS REALTOR/First Vice President

Certified Residential Specialist

Military Relocation Specialist

Trusted Advisor

ERA American Real Estate

850.585.5471

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#8

Send me the API and I will look it up. They use the Lease Numbers when reporting production. A whole different set of files.

What is it you want to know? It might be easier for me to look it up on DrillingInfo.

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#9

API Is 38935700. Trying to check production. If you have a good site for that i would appreciate the recommendation.

Thank you again for your assistance.

Cindy

Cindy Frakes MA Certified Residential Specialist

Military Relocation Specialist

Trusted Advisor REALTOR/First Vice President

ERA American Real Estate

850-585-5471

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#10

It doesn’t look like your well has been officially “completed” yet even though it is producing. You can check on the Comptroller’s site to see oil sales. Here is the link: https://mycpa.cpa.state.tx.us/cong You may have to type this in if the link doesn’t work. This site shows what the oil company is reporting to the state for severance tax purposes.

Click on Lease Drop - Crude Oil in the left-hand pane and enter your Drilling Permit number. Enter the dates 1801 (Jan 2018) to 1807 (July 2018) and hit enter. You should see the quantities and gross prices below.

Hope that helps.

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#11

Cindy Frakes -

Sorry to take so long to get back to you. That Pesky Little Day Job…

Attached is what I could pull up on the Cattle Kate 20-18 Unit No. 1 on DrillingInfo.com.

I haven’t explored Mary Bird’s CONG Website yet, but plan to. If it provides you with the reported Sales information as submitted by the Operator to the Texas Comptroller of Public Accounts, then that would be what will be available through DrillingInfo through it’s Price Data Hub Page (the last page in the attached) whenever those records become available.

The Cattle Kate 20-18 Unit No. 1H was Spudded in (Drilling actually commenced) 2/27/2018. As Mary Bird pointed out, no Completion Report has been filed yet, so no Initial Potential (IP) Test figures are available.

What has been reported, however, is that it produced 24,033 Barrels of Oil and 66,371 MCF during the month of June 2018.

That equals 801 Barrels of Oil Per Day (BOPD) and 2,214.4 MCF of Gas Per Day (MCFD), based upon a 30 Day Month.

It might not have produced for the total 30 days of June, however, so the actual production might be higher. For example, if it produced the 24,033 BO and 66,371 MCF in only 15 Days, that would average 1,602.2 BO and 4,424.7 MCF Per Day.

Just have to wait for the Completion Report and IP Test or additional reported monthly production figures to see what’s what. Tap me on the shoulder in a couple of more months and I’ll take another look at it.

Either way, it doesn’t suck. Congratulations on your new tax problems!

And there’s room for several additional Wells, even 'tho the Unit is oddly shaped and the additional Horizontal Laterals might be shorter and shorter. Maybe they can change the shape of the Unit?

Hope this helps -

Charles

42-389-35700 ROSETTA RES - CATTLE KATE 20-18 UNIT NO. 1H.pdf (1.76 MB)

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#12

Can you help me out. Sorry, but I must be dummer than a stump. When I go to the public records section of the site and enter lease number, or drilling permit, and date range I keep getting “no matching records”. This is under the the “lease drop”. When I simply enter the lease number for a lease lookup, I get information about the lease, but that is it - no volume/price information. What am I doing wrong, or is the information I am looking for not public information. thanks

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#13

Thanks for such informative information.

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#14

Post your well information, county, permit, well name, lease number. Oil and gas sales revenues must be reported to the Texas Comptroller for severance tax purposes and are public information.

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