Question for the members:
Earlier this year recieved a division order this year on a over riding intrest of a Well #1 (panhandle of Texas) that I had from the early 90s that had been in light gas, oil and hydrocarbon production for approximately the last 5 years.
Then Feb 2010 it was suggested by the operating com[pany that a pooling interest be agreed to for the refrence Well #1 location. The well lease was suggested to be divided from 320 Acres to 160 Acres through the same operating company to drill on the other half a horizontial well on the same property effectivelity cutting the overriding royality payments in half for the new Well #2 (Horizontial)
Now another division order from another operating company has arrived by mail for the second well only which is in production now producing oil , gas and related hydro carbons and they are proposing through another division order a further reduction of intrest ORRI for well two (horizionatl well) to about a 1/8 th of this well only for reported marketing of the gas..
1, Is this a normal practice to take a original lease location and sub divided it? If so why would this be done? ie additional investors or a arbritary business decesion?
2. Once Well 2 (horizontial) is in production is it a common business practice to have another oil gas related company to market it at a fraction of that intrest?
3. Payments: Understanding will checks follow from each of the following accounts:
* Well #1 at the original ORRI intrest rate
* Well #2 Horizontial at the ORRI intest rate that was cut by half from Well #1
*Then another check cut for the marketing of the oil and gas for well 2 only at that prevailing divison order interest rate which at approx a 1/8 value of well #2 (Horizontial)
4. Finally what recourses do I have as a ORRI investor in this proces and is there anyone else that has experienced the same or similar process?
Thanks for the replys in advance.