I have heard of demand letters where a land owner can ask that an e&p company drill on their land if their is a high potential for hydrocarbons in the W2 Oil Well Test Completion and Re-Completion Logs and other documents filed with the RRC. However, if the land owner is a non-participating royalty owner can they send in a demand letter asking that the e&p companies drill, if there is overwhelming proof that oil and gas is under the land owner's land?
What is "drainage" and how is it proved?
I have some very interesting W2 Oil Well Test and Re-Completions that were done on a couple of wells on my ranch and we acquired a NPRI through the deed when we bought the land.
One well produced 170 bbls in 24 hrs plus an additional 1000+ bbls before they could get the thing turned off.
The other which the oil company drew a lateral to produced 90 bbls of oil. Both of them produced 172 MCF to 200 MCF of gas, and the oil was "flowing", i.e. it was not taken from the ground by a gas lift. Now I may only get .0675% due to pooling, but it seems to me, that there is something down there and the seem which I have followed by looking at other wells in the pattern but not close may also be on the reservoir.
My folks filed all types of legal documents to keep oil companies off their land when they were alive. Now, they are gone, and if I can get an oil company to drill the well that was producing the most (after I check it out further with a consulting geologist, and if the results look good take it to the oil company and tell them the old restrictions of oil companies having to stay off the land are no longer in place (and the W2 was grandfathered in) maybe I can sell the place for 10 times the oil production plus the value of the land.
Did you ratify the oil and gas lease? If so, then you can enforce it to the same extent as the executive right/signatory mineral owner. The question then becomes what obligations under the lease does the company have to drill? What are the facts particular to this lease and your interest, e.g., total acreage covered, number of wells drilled under the lease, wells drilled that offset your land, and status of the 2 wells you mention that were drilled, unit size, among other things. I assume you received royalties on the production from the 2 wells that were drilled?
We receive royalties from the the 2 of the 3 wells that were drilled. One of the wells was plugged, which was a shame because it had a W2 Oil Well Test and Re-Completion report showing it had 100bbls/day output, 172 MCF of gas and it was free flowing. The original MPS plat showed a lateral between the second well, the first well, and the second well and the third well. I am not sure about the ratification of the OGML or where to look for it in the OGML. Total acreage covered is a little more than a 1/2 of the total acres in the pool. I am wondering whether if the BHL of a horizontal well that along with almost 95% of the entire lateral that runs on our property with the exception of the SHL being just over the fence entitles us to royalties from the horizontal well?
Your last sentence indicates that you would be a drillsite tract owner, since a portion of the wellbore runs under the property in which you have an interest. However, since you are an NPRI owner, your interest derives from royalty under an oil and gas lease only. That means you have to ratify the oil and gas lease that covers the land in which you have an interest. It sounds like you have the lease. I suggest you send a letter via certified mail to the lessee and current operator of the well, reference the lease, including the legal description of the land in the lease, state that you are ratifying the oil and gas lease, and that you expect to receive your royalty share of production from the well. You might hire a good oil and gas attorney to assist you.