We have mineral rights that are leased and they are currently drilling the fist we’ll, the area is called Dorado. Does anyone know from the start of drilling approximately how long until you receive checks? And how many they are drilling? I’ve gotten crazy high offers to purchase which I’m not interested in. Thank you!
You should receive a division.order within 3-4 months of the first well bore (drilling). You must sign and return the division order (assuming the distribution amount appears correct). Many operators will require you to compete a W-9 before they distribute royalty payments to you. First payment usually occurs 1-4 months after the signing of the division order. Texas law (assuming your well is in Texas) requires payment within 120 days after the first sale of oil or gas minerals from the well bore.
Hopet this helps!
David Wingert
1 Like
It is in township 7 north, range 63 west, 6th pm. I heard they are doing 10 wells.
Is it true that what they offer to purchase the mineral rights is usually about 1/3 of what they expect them to pay?
Ten wells are going to take months to drill. All the wells will be drilled then the rig will be released. Nothing will happen for a time while they wait for a frac crew to become available. This may take several months depending on how busy the frac crews are. Completing 10 wells will take a couple months more. Once production is established, it will take another couple months to get everything set up to be paid. Usually production payments have a lag of two months. For example, oil sold in May will be paid to owners at the end of July. It would not be unusual for this whole process to take a year or more from the start of the first well until owners get paid. You would be crazy to sell your minerals when they are so close to paying off. The only advantage to selling now is that you get a lump sum rather than waiting for future monthly payments, but the lump sum will always be substantially less..
1 Like
Thank you. I figured it would take at least a year if not longer. I’m definitely not selling. Thanks for your information!
The rig is onsite now. Surface location is in sec 36 drilling west, but the perfs will be in 35, 34 and 33 (for a few of them). Bison Operating LLC is the operator.
What does that mean exactly for me?
What section are you in? Your royalty will be determined by what percentage of each well is perforated in your section. Each well will have a slightly different length and perforation percentage.
Some of the wells are finished, one is drilling now, some are listed as DUC, Drilled UnCompleted, so still need some work. Just means that the time frame is slightly shortened now due to current activity.
I have section 34 7 north, 63 west and section 26 same township and range. Thank you.
I’ve gotten an offer over 700k so hoping for some good royalties eventually.
Good to be the middle section in a multi-unit well.
You might want to contact your CPA and do some tax planning for 2026-2028. The first check that you will get will be for many months of production on the wells. It can put you into a new tax bracket. The next check will be for just a month, so don’t be surprised by the drop. The IRS will probably want quarterly payments for that second year, so be ready. They will be based on the large royalties from the first year of production, but the second year actual production will be much lower due to natural decline. Be sure and put away funds from that first year to pay the second year.
Thank you, I will definitely do that! I really appreciate your help!
I also have section 26, 27 and 28 in 7N 63W but I’m not sure if they are drilling there?
Chevron has one active well in 26 from 2012. There were three section multi unit permits from Bison back in late 2018, but they have been cancelled. Covid timing might have had something to do with it. Who knows… Might be new interest if these current ones pan out.
RE Taxes: I have found a good rule of thumb is to set aside at least one months payment for federal taxes. You are also going to have to pay Colorado state income tax of about 5% on top of county and state production taxes..
I complain about the amount of tax but in truth it is a good problem to have.
1 Like
Thank you. I wish they could just take taxes out of the checks but it definitely is a good problem to have.