Help me understand Division Orders

Oil and Gas Leasing Help
1

Before the oil well was drilled, there was an existing Natural Gas well.

The division order for the NG well was giving us a .0069444 Royalty Interest, along with a deceased, no children surviving, cousin who had a .03125 Royalty. This royalty was to be split between the surviving four cousins. Adding that, the four should then own .01649425.

The oil company bought out that lease and offered 3/16th to all Royalty Owners.

The division order we received is for .00445558.

I have contacted the landman and am waiting for a reply as to how they come up with that number, but wanted to ask here if anyone can shed any light on what I may be missing.

PS. I am horrible with decimals, but this does seem to be quite a difference.

2741-leasescannedin.jpg (189 KB)

2

JJ, the net royalty is figured by:

Divide your acres by total acres in drilling unit, then multiply by royalty %.

Example: 10 ac / 640 ac = .015625 × .1875 (3/16) = .002996

I can’t do the math without knowing the starting acreage or if your numbers are before or after taking the 3/16.

You have to know 1. How many acres you own 2. How many acres in the drilling unit 3. Royalty % such as 3/16.

3

JJ,

According to the decimal interests you posted, the older well share to you should be 0.0147569

(.0069444 + 1/4 of .03125)

When you sold the lease and the buyer included that lease in a new well, the spacing unit for the new well must have changed. I can’t tell from the decimal interest how many net mineral acres you had under the original lease but it is about .0787035 times the size of the NG producing unit. i.e., 6.25 acres in 80-acre up to about 50 net mineral acres in a 640-acre unit. If you know the net mineral acres originally leased, including your deceased cousin’s lease, and the size of the unit for the new division order, I think you can figure it out. If not, you can contact me when you know those numbers.

Also check the sale agreement for the lease and see if you got 3/16 of 8/8ths. That lease sale assignment may hold the key to calculating your new decimal interest.

4

Guess you all are not seeing that attachment. It’s a portion of the lease that spells out 160 acres and 3/16ths.

The original gas lease was on the same 160 acres. So it would be 160 / 160, 3/16.

Also check the sale agreement for the lease and see if you got 3/16 of 8/8ths. Huh? I am lost on this one? The lease states 3/16, no 8/8ths. Sorry, such a newbie.

5

JJ,

The lease is in gross acres (160). How much of the 160 is yours and how much of the 160 was your deceased cousin’s?

You said that the oil company “bought the lease.” Did you mean they leased the acreage for 3/16 or did they buy your leasehold interest after you leased?

Do you know the name of the well from the check stubs? Or the API number?

6

The oil company paid the gas company to release us from that lease. Due to lack of production and low natural gas prices it was shut off and not producing.

The 160 acres minerals only, are split between all family members. The mineral deed itself is in all our names and does not specify you get this five acres or they get that 25 acres, only percentages of the minerals.

Well name is Shoffner 22-1 api number is, 35071244730000, oper. number is, 19351.

7

Now we are getting somewhere. What was your original percentage? I will guess that your cousin got 25% and had a 1/8 royalty on the first well lease. But that is just an educated guess. Did you and your cousin have different royalty rates in the first well? At any rate the unit size is much bigger for the new well.

I will look up the new well’s unit size while you find the original percentages for you and your cousin. What County is the well?

gary H

JJinNewkirk said:

The oil company paid the gas company to release us from that lease. Due to lack of production and low ng prices it was shut off and not producing.

The 160 acres minerals only, are split between all family members. The mineral deed itself is in all our names and does not specify you get this five acres or they get that 25 acres, only percentages of the minerals.

Well name is Shoffner 22-1 api number is , 35071244730000, oper. number is, 19351.

8

Kay County, Oklahoma.

Cousin’s original was

.03125

Ours was

.0069444

I appreciate your responses. Thank you so much.

9

Shoffner 22-1 is a 40 acre unit.

http://imaging.occeweb.com/OG/Well%20Records/1DD052DB.pdf

10

That is the original decimal interest in the NG well. What was the % interest in the mineral deed?

gary H

JJinNewkirk said:

Kay County, Oklahoma.

Cousin’s original was

.03125

Ours was

.0069444

I appreciate your responses. Thank you so much.

11

Guess I will have to go to courthouse and print one out. Everything I have just says minerals on the 160 acres. Nothing about how those are split except the NG lease.

12

Gary, I sure wish you would spell your last name correctly!

13

I will try harder. Perhaps we have a connection back in Merry Ol’ Scotland.

Michael Hutchison said:

Gary, I sure wish you would spell your last name correctly!

14

JJ,

With help from Rick Howell, it appears that the DO is only giving you credit for 0.95 acres of the 40-acre spacing. If you think that is all you have so be it. If you think they left out the 1/4 interest from your cousin, you may want to go to the courthouse.

Another way to check is to tell me or Rick Howell the size of the unit in the NG well. With that we can calculate acreage and percentage that is yours.

Gary Hutchinson

JJinNewkirk said:

Guess I will have to go to courthouse and print one out. Everything I have just says minerals on the 160 acres. Nothing about how those are split except the NG lease.

15

Thanks Rick.

You can sure get around in the OG records faster than I can. Are you for hire??

Gary Hutchinson

Rick Howell said:

Shoffner 22-1 is a 40-acre unit.

16

The NG lease, which was Shoffner B1 and B2A, legal description is

NW quarter Section 22, Township 29 North Range 1 West.

I am not seeing the acreage on there unless it’s determined by that legal description.

Gary L. Hutchinson said:

JJ,

With help from Rick Howell, it appears that the DO is only giving you credit for 0.95 acres of the 40 acre spacing. If you think that is all you have so be it. If you think they left out the 1/4 interest from your cousin, you may want to go to the courthouse.

Another way to check is to tell me or Rick Howell the size of the unit in the NG well. With that we can calculate acreage and percentage that is yours.

Gary Hutchinson

JJinNewkirk said:

Guess I will have to go to courthouse and print one out. Everything I have just says minerals on the 160 acres. Nothing about how those are split except the NG lease.

17

Shoffner B-1 and B-2A were plugged in March 2011 API numbers 3507123185 and 3507123189

Both were on the same 160 acre spacing covering the NW quarter

http://imaging.occeweb.com/OG/Well%20Records/00000004/OCC_OG_0SRVV0B_1N4UMS1.pdf

http://imaging.occeweb.com/OG/Well%20Records/02FFB512.pdf

http://imaging.occeweb.com/OG/Well%20Records/00000004/OCC_OG_3FSDDRL_2GLT2SP.pdf

http://imaging.occeweb.com/OG/Well%20Records/02FFB514.pdf

18

I just got lucky! :wink:

Gary L. Hutchinson said:

Thanks Rick.

You can sure get around in the OG records faster than I can. Are you for hire??

Gary Hutchinson

Rick Howell said:

Shoffner 22-1 is a 40 acre unit.

19

Mother owned a .416667 Net Mineral Acre. The Royalty interest that was stated on Mom’s lease is 3/16 (or .1875). The Shoffner 1-22 Unit is 40 acres. So to get to your royalty interest, you divide the number of net mineral acres you own by the unit size. (.416667/40 = .0104166) Then you multiply .0104166 by your royalty number (.0104166 x .1875 = .0019531).

Cousin was unmarried and had no will when she died, so all of her interest went to her closest living relatives, which were her two Aunts on her mom’s side - in equal shares, that being 3.75 Net Mineral Acres each and 7.5 Net Mineral Acres to Cousin’s father’s side of the family (which you are not entitled to any share). This is based on the NW/4 being 160 acres.

BUT the Shoffner 1-22 is only 40 acres, so being proportionately reduced, received .9375 Net Mineral Acres each.

G. Grandma had two children with heirs (uncle had no children, so he is not a part of this share), each being entitled to .46875 NMA. So, each of Grandpa’s children, 4, received .1171875 NMA.

This is the landman’s reply when asked how they come up with the numbers. It brings up further questions from me.

The 7.5 acres from unmarried cousin, with no will, is being credited to her dad’s family. Her dad died in 1921, her mom, in 1990, and she died in 2003. The mom was the direct descendant. I was told the minerals stay in the family. Do you think they had a valid claim to that? I don’t even have a name to associate to them.

Also, the uncle who had no children, who is stated is not part of the share. When searching at the courthouse, I did see an undivided mineral deed, from G. Grandma to him, in 1969. He died in 1984. His estate did have to be probated, which I have not pulled yet, and the sale of his assets, house and life insurance, were split between Mother and her siblings. Perhaps, his minerals were split at that time, but it just bugs me that when they did all this research, they don’t show it.

Thanks again for your assistance and thoughts!

20

Looking at those numbers, and yes, I know you all are not lawyers, do you think it would be worth pursuing the 7.5 acres that the landman is attributing to the unmarried cousin’s father’s family? I just looked online and this family has no claims in District court, no probates, nothing listed at all as far as claim to these mineral deeds, until the Oil company signed a lease with them in 2011. Now she died in 2003, and there should have been a claim at that time for the minerals from the existing Natural Gas well. I am finding nothing.

Matter of fact, I am seeing unclaimed property for the state of Oklahoma on the Aunt, who died in 1993 and the daughter who died in 2003.