My siblings and I are receiving royalty checks from Red River Crude Oil (and previously Vitol) and from Daylight Petroleum relating to wells operated by Daylight in Garvin Co. We are the owners of fractional mineral interests in an 80 acre parcel in Section 12 T3N R4W. These wells are apparently subject to the Plan of Unitization for the Northeast Purdy Hart Sand Unit (NEPHU) and the Plan of Unitization for the Northeast Purdy Springer Sand Unit (NEPSU). I say apparently because Daylight’s predecessor Merit Energy was seemingly paying royalties without regard to the unitization. Is anyone receiving similar checks to ours? If so, are you able to independently calculate the NRI appearing on the checks (or in the accompanying statements)? If so, I would like to compare notes. I believe there may be an error in the NRIs that has had the effect of understating royalties paid to my family since the Daylight acquisition in 2019.
These are quite complicated. You have two shallow waterflood fields NEPHU and NEPSU Red River and deeper Horizontals held by Validus.
With respect to the shallow fields, you have to go back to the original unitization documents (findable on the OCC) and locate your tract (which may be on the statement or not-it has changed with the operator changes) on the map exhibits. The original wells before the unit would have been calculated on net acres, spacing and royalty. The spacing would have probably been at 80 acres or 40 acres. One was only paid on the well(s) in the acreage they owned. When the field was unitized for the waterflood, the whole reservoir is now included and the spacing changes dramatically. The decimal goes down, but now you are paid on the production from the whole field but on a very small decimal. If the wells in your section are dead, then you are still paid on any live ones. (I just looked and your shallow wells are either P&A or converted to injection wells, so now original wells are in production, just being used to support the rest of the field.) The new unit often has a Phase I decimal and a Phase II decimal (where everyone is now in time). You can calculate the NRI, but it takes a bit of knowledge. The current statements from Red River may only have the generic roll up title for the field on them now.
If you think you have an error, then you need to get your original lease documents, any old statements from the previous operators (check the decimals to see if they stayed the same), you owner number any why you think you had an error. Contact the royalty owner department. Be ready for a very complicated answer.
Here is an example of one of the maps.
I was mistaken in suggesting that Merit Energy may have been paying royalties without regard to the unitization. They were taking the unitization into account.
I now believe that I may be using the wrong fractional ownership interest in the mineral rights for the 40-acre tracts and that the Daylight (and Red River) NRIs are correct. I just need to get some documentation (deeds or possibly the operator’s title opinion) to shore it up.
Thanks for devoting so much time to your reply. Over the top as usual.
I am not getting any royalites from Validus. Were you suggesting that they were producing something allocable to S12 3N 4W?
For the shallow fields, I understand your post except “the new unit often has a Phase I decimal and a Phase II decimal (where everyone is now in time).” If there are phases for the NEPSU and NEPHU units, I was not aware.
I not only don’t have the leases, I don’t have the deeds relating to the severed mineral interest either. I believe it originally arose with my great grandfather before 1930. I need to get someone to go to the Garvin County Clerk and get some of these records for me. Or maybe I can get Daylight to provide a copy of their title opinion and I might be able to rely on that.
Validus has about eight horizontal wells running under section 12. They were drilled by Casillas, then bought by Validus. You might want to contact them.
Thank you very much for your insight.
Validus supplied a section of their title opinion which showed a 1952 lease signed by my grandfather. I now have a copy of the lease. The opinion also showed that the interest of my grandfather was held entirely by my uncle and none by my father and heirs. However, this would appear to be in conflict with the operators of the NEPHU and NEPSU wells. I have various documentation including division orders and royalty checks and statements from the 1990s for the various operators Exxon, Anadarko, Chesapeake, Merit Energy, and Daylight. I supplied some of the division order and similar information from the other companies with Validus. We will see what they say. I have someone going to visit the Garvin County Clerk’s Office this week to search for deeds and records affecting ownership from before 1930 to when indexing begins in 1991.
Hopefully they can find a will from your grandfather. It may be located in another county if he died elsewhere. Good luck!