Division Order sent by Huck Farms

Okay, are you ready for something strange?

Received a division order recently from Transoil Marketing out of Abilene, TX for a property my mother owns in Okfuskee, Sec. 18-10N-9E. Property # is T1117 and property name is “Bear 8”. The Operator is Huck Farms, Inc. A decimal interest was listed and the DO looks legit. They included a W-9 form as well. The problem is my mother never received nor signed a lease for this property! Nor did she ever receive the “letter of intent” that comes before a lease, asking which bonus/royalty option she would accept.

I called Transoil, the company who sent the division order, and was told all they do is “collect the product, transport it, and send royalty checks.” (Apparently they also send division orders, but I didn’t quibble.) The secretary I talked to said to call the operator and gave me the number. I called, and a guy with a thick Oklahoma accent answered, said he was the owner of Huck Farms, and told me he didn’t know much about the paperwork angle–he was busy trying to find oil.

He gave me his email address and said he’d try to find more info for me regarding the lease we never received. I emailed him two days ago and explained briefly the leasing process, as I truly believe he doesn’t know a thing about it! I haven’t heard back yet. I don’t have a lot of confidence I’ll hear from him again.

Has anyone else heard of this operator and/or had a similar experience?

Thanks in advance for any responses!

It is possible that your mother’s holdings are “held by production” from an older lease or pooling order. In those cases you would not receive a new lease offer, just a division order. It doesn’t take much production for some wells to be considered held by production (HBP). We have received these from Transoil before and they are legit.

Huck Farms bought the Bear 8 from Donna Stokes in Feb 2022. It was originally drilled in 1987 and had been sold multiple times. Unless the well is part of a unit, I would be suspicious that the lease is actually any good any more and I would not sign the division order without getting a copy of the original lease and the production history showing that the well has been actively online since 1987. If there was a gap in production of more than 12 months, the old lease may no longer be in effect and he would need a new one from you. This is a shallow well in the Red Fork. The OTC only shows one pickup of oil by Transoil in August of 2022. Nothing in September, Oct, Nov of 2021, so I am wondering if there was a pickup in Aug 2021. Transoil is legit, but the operator needs to have all their paperwork in order. 158.37 bbls in a year puts the well close to stripper status, so not sure what the rules are on that amount of production. One source I looked at had last production in 2016 before this one pickup, so this needs more investigation.

Thanks Martha, for the useful information! I don’t know how to proceed with investigating this, any ideas? My mom will not sign nor will we return the DO for the time being, of course.

Thanks for your input. I keep careful records, including a spreadsheet listing all producing and non-producing properties, with locations, well names, and all other pertinent info, and have no record of a lease for Okfuskee 18-10N-9E nor any record of payments on a Bear 8 well. I started keeping records for my mother in 2010, and she inherited her mineral interest in 1980. I don’t have complete info on some of her “old” properties that were leased before I took over record-keeping, but if we were receiving royalties on this property, we would surely have seen the legal description and/or Bear 8 well listed on royalty check receipts, and we have not seen this property or well listed on any royalty receipts.

There were a bunch of Bear wells drilled back in the early 80’s. She may have been force pooled back then. Or the person before her may have been pooled which is why you have no lease. These were pretty low producing wells. The cumulative oil for this well was 16,087 bbls and was only picked up rarely, so could have easily fallen below the radar. Ask the new operator why he thinks your mother has ownership and what does the title chain say. Sunoco was the original oil gatherer. This well was also called #1, so some confusion in naming. API 35-107-72411. It is located in the NE4 of the section and there quite a few other wells, so finding out about all of them could be helpful. Well 3 is actually one of the better wells, so I would want a piece of that one. Huck Farms has that one as well.

Yes, I believe it since I have been in a similar situation. At least it is a good surprise and doesn’t appear to be a case of mistaken identity since you do have ownership in the section and there is really a well there. You are correct that Transoil, or their owner, Tauber Oil, does have a Division Order dept. They have been reasonable to deal with when I have worked with them.

Martha:

Thank you again for the additional info!

I was thinking as I wrote my response to PeteR that there are a few oil companies that list “units” on my mother’s royalty check receipts (e.g., East Fitts Unit in Pontotoc Co., South Hotulke Unit, Tracts 2-8 iin Pottawatomie Co.). Guess what? Sunoco was one of the companies that paid my mother royalties gathered from “units” and “tracts” (but they didn’t list well names, nor a legal description). Martha, could you explain what a “unit” and “tract” is and how it differs from a “regular” property (by “regular” I mean one listed just by legal description and well name).

We received royalties from Sunoco for a long time, probably going back to the 1990s, and up through 2018. There’s a chance we were being paid for the well Huck Farms calls “Bear 8” but it was called #1 by Sunoco (or they went by the API number) and I overlooked recording that in my spreadsheet. We were notified in 2019 that Citation Oil & Gas had taken over some of Sunoco’s holdings and mom now receives royalties from Citation.

Unfortunately I am not at home right now, so I can’t look up old records, but as soon as possible, I will look at old Sunoco receipts and current Citation receipts to see if there was/is any #1 well listed, or the API number you gave, Martha. Will also look at well #3 in the NE4 as you suggest.

Strange mystery, I will follow up here when I solve it!

The word “unit” can be used in various ways in various states. I have some wells that are called something like Smith Unit 1. In that case, it is a single well. Many old, old wells have a single well unit name. The larger ones like you listed above are secondary recovery units. This is when a reservoir was drilled originally by several operators and over time they realized that they were in the same sand or limestone reservoir. The pressure dropped due to production and infill drilling and waterflood or gas flood support was needed to get more oil out of the reservoir. In that case, the operators banded together, chose a single operator and filed for secondary recovery permission. This was then called a waterflood Unit and frequently the names of the original wells were changed and the unit was organized by tracts which were the drainage areas of the original wells. Sort of like city blocks all belonging to a neighborhood. Here is an example of one of yours…https://imaging.occ.ok.gov/OG/Unitization/005A7EF5.pdf The old Jones #1 well might be Tract 1, Ralph 1 is now Tract 2, etc.

The word “tract” can have several meanings. It can be a tract of land such as the SE4 SE4 SE4 that grandpa had his farm house on and might have had a single well or it can morph into a technical tract for a waterflood unit as above.

You can look up those old units on the OCC website. I have found it useful to look up the original documents and then download them to my digital files. They have the maps with the original well names and the new tract numbers, the acres and the participation factors which help you figure out your decimal interest.

A new website out there is MineralIQ with the letter “I”. It is a free offering from Enverus and links to their Energy Link revenue service. If your operator is part of the Energy Link reporting service, then you can sign up for Mineral IQ and get an easy way to see your wells on a map, download your revenue statements and get a better handle on your record keeping. You can also upload your other statements. I have found their list of my wells invaluable in tracking those old unit wells. They list the original name of the well and the new tract numbers and the API numbers which is golden data! The web link is www.mineralIQ.com. For the time being it is free!

I have no ties to them other than just as a mineral owner user. Found out about them at NARO last year and tried it. Not perfect but a huge step up!

Angela: Signing a DO and returning it will only put your mother in pay status. It will not change any title or anything else. If you interest is eventually greater than what the DO shows, you will be entitled to back payments with statutory interest. Should you want to be paid and don’t want to complete the DO, just send the Payor a W-9 providing your tax ID#. DO’s aren’t required in Oklahoma to get paid. You might as well have some or all of your money while you try to figure things out.

All this time I’ve been handling my mother’s mineral interest and I never took the time to find out what a “unit” means, or the more complicated meaning of “tract”–now I know! Thank you for your detailed responses, and the patience you display with people wanting to learn more at this board, Martha!

Great tip! I know some of our holdings are on the Energy Link reporting service, so I will sign up for Mineral IQ and see what I can find there.

Thanks for the info, Todd. Did not know DOs aren’t required in Oklahoma. Sending just the W9 for now is a workable compromise until I find out more.

Probably won’t hurt to sign the DO and the W-9 and get some back money. But still follow up on getting a copy of the lease. Also, the description of your mom’s acreage (if any) in that section will determine how many of Bear wells are open for discussion.

A bunch of my old unit wells are found with operators on Energylink. I used to have one operator pay by the unit-one line. Then a new group bought them and now I have about 50 lines with the old well names, tract numbers and API numbers. Now I can see which ones are inactive and which ones are active. I can go back to my mom’s old well files and match things up now.

Also, be aware that some units overlap each other like a layer cake so you can have different units (with different tract numbers) on the same mineral acreage.

I’ve spent several hours today trying to find out more about when my mother may have been previously paid royalties for what is now called the Bear 8 well, and am coming up dry. Martha, you mentioned Sunoco was the original driller, so I looked up some old receipts from them, and found from 2019 a Douglass Unit - Tract 5 in Okfuskee that produced oil. Searching “Douglass Unit” at OCC and Wellbrowse produced no results, so just entered Douglass for well name and 5 for well number at OCC and one item appeared but it’s in a different section (21) than Bear 8 (Sec. 18). Citation, another company we get royalties from, took over some of Sunoco’s holdings, but that Unit is in Pontotoc county. I think I’ll quit looking for today before I get a headache. I ended up sending the signed DO and W-9 from Huck Farms to Transoil.

Based on the info you gave about its usefulness, Martha, I went to EnergyLink and found I had an account there for my mom already, but there are only two paying companies listed under my mom’s name. Checked the list of Operators and see that many we get royalties from are listed there.

I searched this board for more info on EnergyLink and found your reply to someone that stated “You can find a list of the companies that use Energylink in the upper right corner. Not all companies do. If your additional company is listed, then you can give your owner number listed on the check stub and ask that the new company be included in your statements list.” I thought this meant you could somehow get the statements from a listed company to appear in your account at EnergyLink by entering an owner number at the site by yourself, but I found no way to do this, so I think you meant that I would need to call or email the company and ask to have statements listed at EnergyLink? I saw another response from someone that indicated this.

Statements that used to appear at Oildex don’t transfer automatically to EnergyLink, I’ve found. I received notice from at least one company that we need to contact EnergyLink to get those statements listed at the EnergyLink site.

I signed up for MineralIQ and linked my mom’s EnergyLink account. I like the well list feature, very handy! Thanks again for your help, Martha.

Yes, you will need to email the Support Desk for Energy Link to get other operators on there. Check their list first to see if they carry them. Might need several checks as they add new ones all the time.

FWIW, my experience with EnergyLink is that they still have multiple issues that need resolving. For one, they can’t add a company that hasn’t signed up with them yet, and obviously your data/assets won’t show there or on MineraliQ.

I’ve also run into problems where check data from companies that have already signed up with them (such as Native Exploration Operating) can suddenly fail to register on EnergyLink’s website. My attempts to contact EnergyLink have gone unanswered.

As handy as EnergyLink can be, I can’t help but be leery of third parties that get bigger and diminish your source of check stub data to only one source–if they decide to change their “free usage” policy/policies at some point (or try to make some kind of censorship move like PayPal recently tried to do), that would not bode well for mineral owners. I say that, as I have no check stub data from EnergyLink, and Native Exploration Operating just says “See attached owner statement and/or EnergyLink for check stub detail”–and neither company has returned my e-mails asking for this to be resolved.

Forgive my jumping in to the discussion, but I’m curious as to what @TODD_M_Baker noted; namely:

Should you want to be paid and don’t want to complete the DO, just send the Payor a W-9 providing your tax ID#. DO’s aren’t required in Oklahoma to get paid. You might as well have some or all of your money while you try to figure things out.

How is it possible to be paid without a Division Order, since the royalty rate percentage would be unknown? Is there a default royalty rate that Oklahoma reverts to by law?

Also–something else I’ve been curious about–what happens if you choose not to sign a Division Order? Assuming they have your W-9, is the oil company that wants to lease legally required to pay you within a certain time period after the well is completed?