I inherited mineral interests in Township 17 North Range 5 West Section 4 SENE Lot 1 WIM which were leased by my grandmother with 3/16 royalty, no deduct in 1966. One vertical well was completed (Smith #1) then placed in the Lincoln North Unit 87-1 in early 1970ish. The present operator on this well is Hinkle Oil and Gas. Our family has enjoyed a reasonable continuing royalty over the years.
In March 2019, Ok Energy Acquisitions completed the first of 3 horizontal wells. We were in no way a party to this pooling. We assumed that the existing lease was “holding” the property and then we started to receive small royalty payments; however, Energy Acquisitions evidently fell on hard times with Mach ending up with the horizontals and evidently was able to rewrite my original lease making me a “Blanchard” interest.
My basic question is why Mach is allowed to unilaterally alter the conditions of my 1966 lease as a result of activities in 2019. Is this the result of a bankruptcy? This has changed my interest to a “Blanchard” interest and subtraction of substantial post-production expenses.
Secondarily, I am getting notices indicating that Mach wants to increase the well density. I have also been notified that there are several permit applications which may affect my North Lincoln tract.
Finally, there is no production that I can find reported for my North Lincoln tract nor is there production information available on the Mach activities. I do get the run tickets from the operators, but the Oklahoma website does not show production numbers, at least that I have been able to find.
You can find the unitization and how that changed your percentage. You are part of a large secondary recovery project so are now receiving your portion of the whole field’s production based upon your acreage in sec 4. https://imaging.occ.ok.gov/imaging/OGUnitization.aspx
As the Mach activities progress, you will receive the relevant OCC paperwork. (if your name and address are properly filed in the Kingfisher courthouse).
Your lease did not change, but the decimal interest has been changed and overridden by the secondary recovery documents and rulings by the OCC regarding them. Secondary recovery units do charge post production charges, but the offsetting benefit is that instead of only getting paid on your wells on your tract, you now get paid on all of the wells in the field! If all the wells on your tract cease production, you still get paid on the rest of the remaining producing wells. Secondary recovery can extend field life for decades!
T17N R5W SEC 4
I can be thankful that we are in the unit since I see my INITIAL Smith1 well was plugged and abandoned years ago, but the N Lincoln unit still generates revenue, which in fact exceeds the revenue of 3 recent horizontal wells on the 640A spacing encompassing my minerals.
I have to say HURRAY FOR UNITIZATION AND SECONDARY RECOVERY!