Can anybody help clarify what the following letter from Mewbourne means about my mineral rights? Should we refuse?
And when I call them on Monday, what questions should I ask?
Thank you in advance!
LETTER:
Ladies and Gentlemen:
Mewbourne Oil Company (“Mewbourne”) has filed an application with the New Mexico Oil Conservation Division (“Division”) seeking authorization to surface commingle production from the wells attached hereto and all future wells located on the Leases, covering all or portions of Sections 2 & 11, T25S, R28E, Eddy County, New Mexico. All oil and gas production from these wells is to be stored in a Central Tank Battery and all gas production will be measured by a meter for each well, then commingled and sold to a common gas sales meter located on the same pad as the CTB. Information detailing each well is attached.
If you object to the either application, you must notify the Division in writing no later than 20 days from the date of this letter (the Division’s address is xxx ). Failure to object will preclude you from contesting this matter later.
Should you have any questions regarding the above, please email xxx
Ps: This letter is dated October 1, but I received it via certified mail today, December 27. Seems shady that they say I only have 20 days after the date of the letter to contest, but I receive it 2 months after the date!
You can check the USPS website tracking using the certified numbers to see when the letter was mailed and how it proceeded through the system. Delivery may have been delayed there. So you could assert this as reason for late protest. Commingling is a common way to cut costs to transfer oil and gas from multiple wells to a central collection facility and then to enter pipelines for sale. Your question might be whether oil and gas are actually being measured at wellhead or only tested periodically and proportionately allocated back to wells. Any objection must be filed with NMOCD and then you have to either come to an agreement with the operator or be prepared to present and justify your reasons at a hearing at NMOCD. This will require a lawyer. If it approved over your protest, then you will have to sue either the NMOCD or operator (depending on state law). This is Texas process and presumably same in NM. Simply objecting by a letter will not stop this. Likely not economic unless you have a large number of NMA or can argue your lease prohibits commingling.
Work with mewbourne. Good people nothing shady. Been around a long time and been very good at finding. I completed a mewbourne well in Oklahoma 30 years ago that was coming in good. Blowing oil out of Frac tanks up into the trees. Flow lines rattling. No water. Still producing today and mewbourne has 8 rigs running in same area today. Green light. Good luck
I second what Rockhound says- Mewbourne is a solid operator and historically has been very easy to work with in our experience so you can direct any questions to them and I would think they will share information with you. In terms of the notice, comingling in NM is extremely common. Operators do this to lower costs, reach marginal areas/zones for production, prove to the OCD that they are limiting waste (a law in the state), and generally extend the life of wells. The notices are required by the OCD to provide the MI owners an option to contest but in our experience it’s rarely worth doing so as it usually means healthier production and longevity for our interests. From my understanding the biggest concern is allocation accuracy to make sure royalties are not wrongly diluted by errors in math. This can be checked by asking the Operator for more information on their methodology which they must provide. We also watch our royalty information after comingling to make sure no sudden drops in royalties or weird volume changes. If there are, you can also ask for a royalty audit which operators have to provide owners as well. With Mewboure being a reputable player in the area they should provide you with all the detail you request in order to review and have on file.
You will enjoy working with mewbourne all they do is find and produce oil. I did consulting for mewbourne it’s a real live oil company. They don’t sell the sizzle they sell the steak. How refreshing
When Mr mewbourne died the mewbourne staff focused down on the basics (find and produce oil/don’t drill dry holes and really stepped up. They didn’t collapse they tightened up and kept exploring and finding oil. And it’s working out good
This is common and not really an issue IMO. In the end, in all cases, you are trusting the oil company to tell you how much your well produced. This is just making that process a more complicated for the oil company, but is also reducing the number of surface facilities (and sales points) that the oil company operates. Which saves them some money.
Its not worth protesting. If this introduces some increased chance of measurement error into the system (debatable) it’s just as likely to help you as to hurt you. I pretty much just throw them away.