Dustin you would be paid 16% from the first barrel until the well was paid off and the penalty retired as non-consent. Frankly, when I advised that you could go non-consent last year, you had not told yet how small your interest was. Your small interest will not pay a significant amount of money even if you participated. If you had even a few acres I would take 16% for a period of time and 100% thereafter rather than 18% for all time. My brother and I are non-consent in a spacing where we have 1.935 acres with 4 wells and we are fine with that. Consider that if the operator intends to recover up to $50,000 per acre per well in the spacing over a period of time of 30 years, 8 million dollar well which with penalty is costing you 12 million. 12 million divided by 1280 =$9,375 per acre.
Dustin, I must apologize to you. In an earlier post I gave you the wrong production figures for your Idaho well which in fact has a production of 63,509 barrels through November (3 months plus a partial month) and a production of 18,392 barrels in November. The Clearwater well has a production exceeding 156k barrels. To the best of my knowledge I have never made such an error before, please accept my apology. Both wells are still great wells, I just wish for your sake you had more acres under them.
Dustin, I have no doubt that these wells will pay out and pay out quickly, there just may not be enough of it to make it worth your while to be non-consent or even participate for that matter. I would ask for more than the $800/ net acre and 18%, I would consider that offer an insult.
If at all possible I would pay the participation which should be fairly low so the operator would make little to nothing off my interest and then seek to sell my interests in these wells because if this is all you have, it will probably not be worth it to you to administer. Who might want to buy your small interest? There are probably some minority interest holders on your AFE THAT WOULD LOVE TO PICK UP ANY MORE INTEREST UNDER THESE WELLS, they already have the paperwork to do for their interest anyway, and it's all money!
In my opinion it would not hurt EOG to offer you $4,000 per net acre ($640 total) and 22% royalty on your .16 acre. As non-consent, you aren't going to notice a big difference between 16% and 18%. If it were mine, EOG could do better, or I would participate and sell it, not that EOG would ever miss the net revenue of .16 acres even with great wells on it but just on principle, because I think they are offering you much less than they would offer anyone else in that spacing that even had 2 acres. I figure if you reward companies, or people for that matter, for being POOPHEADS, then poopheads they will be. Realistically speaking, I think you should have been offered more, been safely leased so you don't even have to think about it anymore, but someone decided to squeeze you because they could and you came here looking for information. Good luck Dustin.
Dustin Larson said:
So would I be better off signing a lease? Or just not worrying about it at all?