You are welcome. No, no OCC. Just a mineral owner who manages the family minerals after retiring from my 30 year career on the “other side of the fence” as a production and exploration geologist. My turn to give back a little!
Thanks M Barnes, I also appreciate the information and guidance that you have provided. I have a related question. I have mineral rights in 20-19n-07w. The spacing and pooling was for Mississippian, Woodford and Hunton. The well was fracked and put in to production last week ( i haven’t seen evidence of the production, but that is what Husky told me). The original drilling permit only shows Hunton and depth for Hunton. When they did the original drilling, did they also case the other two formations or will they case those when they are ready to produce from those formations?
M, What they are doing is very common and quite legal. In Oklahoma, (so far), each section is stand-alone at 640 acre spacing for gas and for horizontal wells for the reservoirs to be drilled. Before drilling, a company must make sure that the sections have been approved for the correct spacing for the correct type of well. Vertical oil wells are usually spaced at 80 acre spacing or smaller for infill drilling. For horizontal drilling, they are usually spaced at 640 acres. The 201500606 CD (Order 639392) was for Section 29. It changed the spacing in 29 from 80 acres to 640 acres for Mississippi Lime, Woodford and Hunton reservoirs. It was approved April 15, 2015, so is very current.
CD 201502055 is doing the same thing for Section 21. It will change 80 ac spacing to 640 acre spacing for the named reservoirs. It is okay for them to extend the extent of a previous order and go retroactive. Sometimes they will do quite large areas. Note that each CD states that the section may only have one 640 acre well with a buffer zone at the section boundaries. To change that, they have to go back to the OCC to get permission to drill a multi-unit well.
Now to the crux of your question. If a one-section well is drilled, the royalties will be paid only for that one section. You can’t drain the guy next door. That is what the buffer zone is for. However, if they come back later and want a multi-zone well that will cross that buffer zone (for both sections), then they will perforate across the buffer in both sections and royalties are paid on a percentage basis of the feet of perforations in each section. Might be 50/50. 40/60, etc. In this case, 21 and 29 will probably not impact each other. Most wells in this area are drilled pretty much north south for lots of structural reasons. 21 and 29 are catty corner to each other, so any multi-unit well will probably not go from one into the other. There are some exceptions, but rare. 21 won’t steal from 29.
Hope that answers your question. If you need me to draw a picture, let me know.
M. Barnes. Thanks for the clear explanation. I think you are doing us all a favor. JWMehew
OK, here we go. 1 of 3 This will be in several panels. On the left is a map view of nine sections centered on s. 21-18N-8W. The Woodford reservoir extends over counties and counties of OK, so they only space parts of it when they are interested in drilling. Section 29 (lower left) has a horizontal well proposed called the Firefly 1-29H. It will drill from south to north-only in section 29. Older wells exist in 29. They are drilled on 80 acre spacing. At the time they were spaced, the whole section was spaced at 80 acres for many zones. See the next panel which I will post in a couple of minutes. It lists the spacing in the area with the reservoirs by code number. On the right side is a cross section through 29 and 20 which shows the well path of the Firefly well. It cannot be drilled any closer to the edge of the section than the “buffer zone” allowed in the spacing order. It will go north across 29, but will stop at the buffer of 29 at the border of 20. They could permit a well in 20 that would cover it, or they could permit another multi-unit well that could go from 29 and go all the way across 29 and 20. They have to have permission to perforate in the buffer zone between the two. The production royalties would then be split between the percentages perforated in each section. They will not be allowed to drill from 29 into 21 for lots of reasons which I won’t go into. 
2 of 3
Here is the map from the spacing orders. The link is better, but I made a png so you can see it here. You can see the older wells. Go to the link to see the different colors which represent different horizons. Proposed well is the dashed line through the middle of 29. They can move it if they wish. Needs OCC approval.
http://imaging.occeweb.com/AP/CaseFiles/occ5188244.pdf
Thanks for responding.
I will attempt to explain my concern/question. The Corporation Commission is hearing an application 201502055. In paragraph 2.2.b of the application Husky is asking for “extension of Order No. 639392 from Section 29 into 21.” In paragraph 2.3 it says “Section 21 shall comprise one horizontal well unit.” What I want to know is, does extending Section 29 into 21 mean that all pay from production from Section 21 will be divided up not only with Section 21 but also Section 29. Date of hearing will be
it will take me a little bit of time to draw it up, but it may be useful. Back soon.
M Barnes-
Thanks for sending along the drawings.
Scott,
The Hunton lies below the MIss and Woodford, so they did have to case them off before they perforated the Hunton. They are protected for possible later production. At this time, they would have to drill a different well or two for the production from them. That Hunton zone in the current could last for a very long time.
Mr. Barnes, if I may ask, what website do you use to type in the legals and see if there is any activity going on?
Most likely means no well for a while. They dismissed all of Payrock’s pending items regarding that section.
Comment by Margaret Kellogg just now Delete Comment
Husky Ventures, according to the newspaper and in my opinion, is having incredibly low initial production frommost of the wells they drill. Does anyone know why this is?
Examples:
04-29-2015 70 barrels oil TD 12,232 1-9Hwell 09-16N-05W
04-29-2015 21 barrels oil TD 13,045 1-1H 01-18N-08W
03-29-15 13 barrels oil TD 13,288
Most of their wells in 2014 and 2015 have been like this in the newspaper, with only 4 out of 14 wells over 100 barrels. Are they deliberately not producing the wells because of low price per barrel?
Thanks M Barnes… Looking forward to a long and productive well…
Oklahoma House Bill HB2177 is of interest.
Mike, Update from Payrock Energy’s Application for Exception ( Relief Sought ) for Sec24 16N 7W Was dismissed by CC on 20th, April. Any Idea what this means?
all - I am trying to look at Case Files and Well Records for 20-19n-07w through OCC Imaging. I just did the same search this morning with no issues, but tonight I am getting 'Server Error - ‘Imaging/Application’. Is the system down?
Edward, I use several sources. My main one is Drilling Info. It is a paid subscription and isn’t so cheap, but I handle a lot of minerals for my family, so it makes sense for us. I use the OCC website, mostly the Imaged Documents area to look up the wells and the activities of the OCC. I use the OTC website to look up the production. I also use the investor relations sites of the major operators in Oklahoma and scour their power points for maps and trends.
Margaret:
I’m sure our resident geologists can comment further, but the bottom line is that the Hunton formation that Husky often seeks is unlike most others.
The Hunton formation is sometimes called a de-watering play due to the specific development approach used to produce oil and gas from the reservoir. Unlike other reservoirs, the Hunton production has the unique profile of decreasing water cut and increasing oil and gas ratio overtime.
The formation behaves somewhat like a coal bed methane reservoir. The dewatering process lowers reservoir pressure and allows the oil and gas stored in the tighter portion of the reservoir to head into the wellbore.
JWA Thanks very much for that information.