No, that is not correct. The person that owns rights under the well’s surface locations may or may not share in the income.
Because of slant, directional, and horizontal drilling, the surface location does not have a determination in who gets paid. The well will be tied to a spacing order. That spacing order determines where the hydrocarbons will be produced from. A straight vertical well will always pay to the owners directly under the surface. But, a direction or horizontal well may run several hundred feet away from the surface location to get to the spaced unit where the production will come from.
Think of it as we are sitting at a table and I have a 3’ long straw drinking from your glass.
Many horizontal wells have the SHL within the production unit. But they often have surface they can which just outside the production unit. One of the reason they do this it to be able to make the curve from vertical to horizontal and enter the formation as straight and as soon as possible. This allows perforations to occur as soon as it is within the setback distance. We are seeing 330’ approved for setback on the 640 acre spaced wells in the Woodford. It takes 750’-1000’ to make that curve.
So if a person owns mineral rights to a well’s surface location, will it always be true that that person will not share in the production income from that well? I don’t understand.
Karla, I DO think it’s all good in the hood! It’s all just a matter of time. Did NFX tell you they planned to start drilling 17, 8, & 5 the end of Nov? If so, we should have a Merry Christmas in 2015! Or least I hope we will…
A new flurry of offers in different sections has me wondering: Can a mineral owner reasonably infer (offers to buy my rights are up to 12K now) that the eventual return will be AT LEAST as much as the sum of offer and acreage? In my case, I am already pooled and payouts have been coming for a year, and yet the offers are picking up. Is this a mathematical equation that works for most mineral owners in a proven high-production area?
Sandra, The offers from a buyers’s side are definitely going to make them money-more than they offer you. From classes I have been in and listening to folks, the offer is in the neighborhood of a third to half of what they think it is worth. So that should make you feel better. Also, in the proven horizontal areas, they will most likely come back and drill more wells, so their offer is based on more than just your first well. It is based on the ultimate value of the acreage. Also could be based upon the value of more than one zone.
Thanks, Martha, that is encouraging. There is a mineral owners’ (out-of-state Okla.) conference here in San Antonio in October, I have been wondering if I need to go and learn something?! Probably much more info than I can deal with in one sitting!
Sandra…did you listen to the Continental part of the Conference they participated in a few days ago? If not you should go to the CR website and click on the webcast that is under the picture on the SW corner of the picture. You will probably want to fast forward it past the first 2 or 3 hours to the part where they start the discussion on the SCOOP and the Springer Fairway. It is very exciting for us Okies and the ones of you that have mineral rights in Oklahoma!!!
Drilling deeper most likely will not bother the upper horizon if it is at least 150’ deeper and has a good shale in between from a geologic point of view. The OCC should set the spacing correctly and they would be careful that well bores do not run into each other. That being said, there is no guarantee. When a different well is frac’d, earlier wells are often shut in. Wells are not particularly fond of being shut in from a mechanical point of view. Sometimes, they do not come back on as high as before as hydrocarbon streams do not like to be disrupted and sometimes if they are on pumps, the startup can pull particles into the screens and plug them up or something topsides will get messed up. Sometimes wells come on better if they lay fallow for a while and can build up better pressure. Some fields do this on purpose-especially offshore. So, there is a risk, but if you have a prudent operator, they want to make as much money as possible and will be careful.
I would recommend you attending the NARO convention. Either the National Convention that will be held in Albuquerque in a couple of weeks or the Oklahoma State one in Tulsa.
I have not been to the one the OCC puts on, but have seen the material. By all means attend if you can, but I feel the NARO conventions have quite a bit more to offer. I understand the cost/time can be limiting however.
