Family owns 1/4 of Section 189 , Block 34 Ward county and our first well is scheduled to be activated very soon. All other 3/4 have no activity last time I had a map of the area . We have been told we must go with complete pooling. I understand future benefits if other areas in our section ever are used, but its lack of activity to date is discouraging given the surrounding areas have been quite active all around our section.
Any way to find out who owns these inactive 3/4 in our section-or ascertain if any special reason why no activity there? Can I assume the $ shared " are really going to another owner-not the oil co.?
Thanks
Bill H.
Anadarko has drilled Cornell 34-189 Unit 1H well in NW/2 NW/2 of Section 189 and so well is located in both N/4 and in W/4 of section. There are a lot of mineral owners in Section 189, most of who own small net mineral acres. Do you own 100% of the minerals in 1/4 of the section (160 Net mineral acres) or really some lesser percentage of minerals in 160 acres?
Most units in Ward County are at least 320 acres (2 quarter sections). By pooling 640 acres in the entire section, it is possible to drill more wells over time. This is because if there is no "lease line" or "unit line" in the center of the section which would mandate adjacent wellbores be at least 330 feet away. A well can be drilled along the center line of the section. Anadarko has drilled up to 8 Wolfcamp wells in a section, at varying depths within the wolfcamp formation. So over time, you are very likely get more wells. And your total royalties will be more if some wells are not drilled until prices rise further.
The delay in drilling in Section 189 is due to the large number of mineral owners, all of whom needed to be under lease. It is far easier for a company to drill where there are only a few mineral owners who can be found and leased more easily. Anadarko will pay each mineral owner his share of royalties based on his net mineral acres in the unit. Each mineral owner's royalty decimal will be calculated: Net Mineral Acres / Total Acres in Unit X Royalty Rate. It does not benefit Anadarko financially to include more acres as it then has to pay more mineral owners. Your royalty decimal will be the same for every well in the unit.
T.D.
Thanks so much for your response. Approx. 12 owners (sharing about equally) in our quarter of section 189. I agree about longer run benefits, assuming pooling arrangement doesn't change. In your experience/knowledge is it likely that over time future participants in other 3quarters will in fact be held to same pooling-or can company change the pooling at will ?. I would imagine they couldn't without doing retroactive adjustments-but who knows. ?
Thanks again for the info.
B.H.
To be clear, the Cornell horizontal well is located on 2 different quarter-sections. Only one-half of horizontal wellbore is located on your quarter-section. It is not common for an operator to shrink the size of a unit because then some leases might expire and be released. Oil companies prefer to hang on to the leased minerals as long as possible.
I would say that the operator gains great benefit holding an entire section without having to drill and paying for it with your royalty. I have single wells in five different 1280 acre spacing where the oldest well is 9 years old. Everyone used to tell me not to worry because you are getting a smaller piece of a bigger pie. What it has actually turned out to be, for the last 9 years at least is a smaller piece of a totally theoretical pie. Other spacings bordering mine have up to 8 wells.
In the future, there is nothing that says an operator can not drill on the line, entering a cooperative deal with whoever they have to. I would not want my royalty to go to pay others to hold their acres for the operator.
If I had a choice, I would decline. I don't believe I would be harming the unpooled mineral owners because it would encourage the operator to make it a priority to drill their half section, to use it or lose it.
After the other half section was drilled, I might be willing to approve a new pooling agreement. Pooling agreements are not set in stone.
If it takes the operator more than 9 years to drill the other 320, would you be happy with 1/2 the royalty for 9 years? Or possibly longer? That is what a smaller piece of a bigger pie looks like sometimes.
Professionals often say a bird in the hand is worth two in the bush. If you have a bird, why give half of it away for nothing? Are they promising you increased density with specific dates? Didn't think so.
As for drilling on the line? How about they drill another well on the other side first? Before worrying about on the line? They probably want this pooling so they don't have to drill.
There is nothing that says you can't enter a new pooling agreement at a later date. What are you gaining by entering a full section pooling agreement right now?
RWK:
Thanks for the comments. The concerns you bring up are what I am thinking about. But apparently we have no say about the pooling. We are already in a 2.5 year old (out of 3) lease together. and Have not an opportunity to comment on how the pooling was to be. No official separate notification. Pooling just became obvious when division orders showed % to each. Not sure there is any choice now. Well soon to be operational . We'll see how it goes.
Thanks for help.
BH
Ok Mr. Harrel, I see. I was thinking that you were pooled in a 320 and they wanted you to agree on a modification to be pooled into a 640. As I said if they leave it up to you, I would decline as I can't think of any way it would favor you. I suppose in theory you could protest.