Did my grandparents lease from 1972 just get gobbled up by the establish a 640 acre drilling and spacing unit order. 1972 lease has t produced for 18+ months , Does original lease of 40 acres unit get consumed by this new order? So if any well on the section is producing now I am HBP?
Please give the complete section-township and range and which quarter section. Can’t give an answer without the area to look up the history of the wells in relation to that lease.
Is there a way I can provide details privately?
I will try to answer generically. If your grandparents had a lease back in 1972 and a well was drilled, that well would have been under a spacing unit order. It may have been 40 acres or 80 acres or 640 acres. You can look up the well in the OCC well records data base and find out the original spacing. https://imaging.occ.ok.gov/imaging/OGWellRecords.aspx Look for the Form 1002A which usually has the spacing on it.
Now look at the other wells in the section and see what their spacings are.
If the first well died after 18 months and no other wells were drilled in the same spacing unit and reservoir in a timely fashion stated in the terms of the lease, then the lease would die of its own accord. If a well was drilled within the same spacing unit, but a different reservoir, then the life of that well may affect their acreage.
If the section is spaced at 640 acres for a completely different horizon, then yes, the acreage would be included in the spacing. That is happening a lot these days with deeper drilling into shale reservoirs. Nothing to be worried about. If a deeper well is drilled, then your grandparent’s acreage would be included which is great. The decimal amount on the Division Order would change, but if they did not sell, then they would receive royalties from the new well and any other wells in the 640. The wording of the original lease as to if there was a depth clause might affect whether they would get a new lease or pooling offer. Not many depth clauses back in the 70’s, so if their well died and no new wells were drilled, then they would be offered a new lease (or pooling) for the well that would go into the 640.
Thank you for your response. The well stopped producing in 2018, I believe, about the same time Echo received 640 acre spacing and spud several horizontal wells. So I guess the lease is HBP even though none of the horizontal wells show any production. I guess it makes no difference that the 1972 lease only allowed a Maximum 40 acres spacing for an oil well. Again, thank you very much for your insights.
The earlier well was probably much shallower which would have had a 40 acre spacing for that particular reservoir. Each reservoir has its own spacing to allow for optimal drainage. The lease would be HBP if the deeper horizontal was spudded before the old well stopped producing and the new wells are producing. Since the OK oil patch essentially crawled to a creep last year during COVID, many companies wisely did not frack their wells or choked them back while the prices were very low in order to not lose revenue. Many received extensions in order to do so. You may want to check with the operator and ask what plans there are for the wells. They may have already fracked them and are waiting on Division Orders to be sent out. You can find out if the wells are “active” on the OTC tax site. It runs about four months behind. Use the bottom hole location. Gross Production. You can also see if the completion report has been filed on the OCC wellrecords site. Use the surface location.
https://imaging.occ.ok.gov/imaging/OGWellRecords.aspx
There are several operators who are a bit slow in getting royalties out… If the well has been fracked and is on production and it is more than six months after the first sales date, then you can send a certified letter demanding payment and interest.
If your grandparents have passed away and there are heirs, then the probates must be filed and title passed correctly. Sometimes, that is the hangup.
If the company that drilled the wells was sold to another company, that can also cause a delay.
I love having 640 acre spacing on horizontal wells. It means that I get revenue from every well in that horizon in the section from thousands of feet of perforations which is usually much greater than the revenue from a small shallow well with 10-20’ of perforations.
Thank you for your reply and information all very helpful.
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