I inherited some royalties in Howard County. Currently there are three wells producing royalties from SM Energy. The area is described as “ Being all of that certain Northwest Quarter (NW4) of the Northeast (NE/4) of Section 21, Block 32, Township 1-South, T&P Ry Co. Survey, Howard County, Texas.”
One of the wells, Taggert Louise C, produces very little. Usually under $100 per month for my interest.
My question to the forum is how do I find out what’s going on there because I’m receiving numerous offers for my interest in that well that are anywhere from $18,000 to $90,000 which seems so out of line for current production.
Whom would I need to contact/hire who could give me information about this so I feel like I’m making an informed decision or is the oil business about some people knowing inside information that a newbie can’t find?
Look at the directories in the top menu and find an attorney, I use Eric Camp out of Ft Worth. Any attorney in Oil and Gas in Texas can help you. Also look at the GIS viewer in Texas for what you describe. It may help you understand more as well and it is free. MK
I doubt that they only want the one well. Many times, they don’t know exactly what you own so they will make an initial offer based on a particular well that is drilled on your minerals. (often they get their info from tax records) What they are really after is all of the minerals associated with your lease upon which that well is drilled.
How many mineral acres do you own out of the NW/4 of the NE/4 of Section 21, Block 32, T1S? If you own the entire 1/4 of the NE/4 then that would be 40 acres.
There are several Horizontal wells permitted for Section 20, just west of you and it could be that they are betting that SM Energy will keep moving east since there is room on either side of the three Taggart wells.
Thanks for your responses. The description I typed was actually started by “All of that certain Northwest Quarter (NE/4) of section 21, Block 32” so I guess that means my royalties include the whole 40 acres. So you’re saying that even though the offer referenced Taggert Louise C the buyer probably wants my royalties from the entire quarter of Section 21, Block 32? I guess that makes more sense but still it seems suspiciously generous since the three wells only generate about $600 a month to me. The offer is over a 100 times my average check when most offers I see for other royalties I own are offering 60 times. I don’t know any way to find out if I’m looking a gift horse in the mouth or being picked off because I’m not informed about what’s going on out there. Very confusing business to outsiders. But I appreciate your help very much.
Sections 21 & 22 have room for more infill wells. SM Energy is infilling to the west in 20. HighPeak is infilling to the east and south, so someone may think they know what is coming. Since you are already held with SM Energy, likely to be them.
The way to find out whether you are “looking a gift horse in the mouth” or “being picked off because you are not informed”, is doing exactly what you are doing. Asking questions! First you must know exactly what you own. Do you have a copy of the deed or other document which transferred the minerals to whoever you inherited them from? Do you have a copy of the lease with SM Energy? Do you own a royalty interest or full mineral interest? (There is a difference)
The people in this forum can help you with all of these questions - just ask
The royalties were purchased by my dad back in the 50’s and 60’s and when he passed in 1970 they were part of his estate and each one was divided into 50% for my mom’s trust and 25% each in trusts for my sister and I. The banks trust department distributed them out of the trusts to the beneficiaries in the 80’s and I have the conveyances but no original deeds. In 2000 before she passed our mom conveyed half of her 50% to me and the same to my sister.
I have division orders from SM I signed for the three producing wells and also a Ratification of Oil and Gas Lease I signed when I was first contacted by a Landman working for SM. Evidently the wells had been producing for a few years before our interests were uncovered.At the bottom of this is the description of the property in the conveyances. Looks like just Royalties.
The Ratification seemed to imply that SM already had various halves and quarters of Block 32, Section 21 which they asked for the right to pool.
Sounds like there might be some action happening up there that insiders think might spread into our acreage. I guess I’ll hold on right now and see if something develops.
Thanks again for taking the time to try helping a newbie!
Martha answered the why. Buyers are pricing the undrilled locations in Section 21, not the three Taggart wells. That is why the offer runs 100 times your check. On who to hire: an attorney will read your title but will not value it. For the number you want a mineral appraiser or a valuation report that models those infill wells. Holding is fine, but know the number first. Has SM sent you anything about new wells on 21?
We are “neighbors” in terms of mineral interests on Taggert Louise and her related well on the other side of the section Taggert Thelma. So here are my 2 cents as another mineral owner just trying to figure it all out.
Here is some information that you may have already found if you went clicking around on the TXRRC map.
Just north of these on the TXRRC map you will see that SM has drilled 4 long horizontals that are named PAPAGIORGIO LOUISE C and also A. ( I may have accidentally put in a link there to the TXRRC W-1 for one of those wells.)
API 227-42743 and API 227-42742
We have also been seeing offers on these areas. I’m not sure if either of us will see much if any revenue on these long horizontals that are north of the actual acreage. But when SM was first drilling these wells, we had some good contacts there, and the plan was “in filling” more just like Martha said. Her observations are always spot on in my experience.
I plan on holding on to my interests as do my cousins group. Keep in mind that if you sell, you need to manage the tax on any gains. The API numbers should help you find the new wells. I hope these thoughts aren’t too scattered. It seems like interest from the mineral buyers seems to come just before permits are issued.
Thanks a lot for your response. No I have heard nothing from SM. As a matter of fact when the offers started getting “ crazy” I called SM and asked about why I might be getting such inquiries and the royalty owners rep came and told me in so many words “ I was instructed that I can’t give you any information”. I thought they’d help since they already have me as a customer and I assume I’d automatically participate in any new wells they drill on my acreage. Guess I was wrong about that big time!
Thanks for your information, “Neighbor”. I’m probably going to hold my royalties also. I don’t need the money and these, along with other royalties my dad left us, are sentimental to my sister and I. I’ve been thinking about seeing my lawyer a putting the royalties in an LLC for my heirs to manage after I’m gone. (His suggestion for the easiest way to pass them on.)
I’ve had mixed success navigating the TXRRC site. Not very literate about it. Not sure what an API is or how to read some of the map symbols even with the legend list on the left of the map. Definitely a dumb newbie!
You will receive royalties on additional wells drilled on the acreage. However, no oil company is going to disclose its proprietary development plans to a mineral or royalty owner unless you are contractually entitled to such information. That information is reserved for the operator and working interest owners who are participating in the well. WI owners have to pay their share of the well drilling and operating costs. You can watch for permits on the RRC website which include your tract.
Take your time to explore the TX RRC website as it contains a lot of information. An API number is assigned to every wellbore. It is 8 digits. First two are the state (42 for Texas). Next 3 are the county (227 for Howard County). Final 5 is the wellbore. Taggert Louise C 4547WA has API 42-227-40230. To find production volumes, you need the RRC lease number. Howard is in District 08 and current lease number is 53201. A 5-digit lease is classified as an oil well and a 6 digit lease # is classified as a gas well. Sometimes the assigned lease number will change if the well is recompleted in a new zone or formation or reclassified (oil to gas or vice versa). The API number is constant for the wellbore, even after any production has ceased. On RRC online research queries, you can find the production volumes by using the District and Lease # and setting a range of production dates.
If you want to find Taggert Louise C on the map you can enter the API 22740230 in the search bar on the upper right-hand corner of the map. I’m retired and enjoy poking around the maps. If this post is still open and I spot new permits, I’ll try to circle back around.
Yes, best wishes… SM was much more forthcoming in the earlier days of the lease. We had formed a group of “friends and family” at the time and they were more open to the questions of a larger group. Keep in touch with family and coheirs as well as setting up your own plan for heirs.
