Martha, I agree maybe we should examine the “federal floor” in this matter a little more, and possibly we could get the NSA to do it for us, I’m I know they are looking for better things to do recently. LOL As for cancelling a lease, in the real world, they can be cancelled for a myriad of reasons, has this been tested in the Minerals Leasing area yet? Nearly any violation of any other contract is sufficient for cancellation.
An interesting note or two, first about the Nellie Johnstone 1 well drilled in the 1890’s near Bartlesville, on Indian Territory, not only the first well but the first gusher and it was a real gusher if history accounts are right. The longest producing well in Okla goes to Wheeler 1 drilled in 1912, and still producing today around 6 BOD I hear, but only pumping a couple of hors a day, and not every day?
Michael, Rick is right. Sundance Energy has completed Branson well (1HM )in the Mississippi Lime formation API #: 3508324068. However, on 10/31 Sundance filed Intent To Drill for Branson (2HM) to the MISENER HUNTON formation API # 3508324212. On 11/06 I called the OK Corp Commission and they did state that O/G companies did have the right to finish bring all horizontal wells in a section to completion and production status before making royalty payments on any of the wells.
DOES ANYONE KNOW WHEN FIRST PRODUCTION DAY FOR BRANSON 26 17N 4W WAS? I THOUGHT IT WAS 5/1/2013 WHICH IS 6 MONTHS AND 9 DAYS. NO MONEY YET.
Michael,
First Production is 5/30/2013
Here is a link to the completion report.
giggle - Martha, that is information about bringing all wells in a section to production before paying, this is information no one culd possibly make up, and so all I can say is that it does not surprise me. LOL Another case of producer/drillers etc overstepping their bounderies somewhat, and using the “law” in order to do it. This could conceivably put off paying mineral owners until the fifth generation???
Ronald Von Wilson, All I know is what the Corporation Commission ‘stated’ to me. I believe what the OCC meant was that when you have a more than one producing formation in a horizontal well the operator is allowed to finish bringing all the producing formations to completion before establishing the revenue stream. However, what the OCC actually stated was; “they have that right to finish bringing all the wells in a section to completion and production status before making royalty payments.” There is most likely statutory law that allows delay in payments in some situations and it makes sense that the OCC would allow an operator to complete all the producing formations that were discovered during a horizontal drilling process before making royalty payments. However, I do not think this is fair to the mineral owners, but then making you what 6 months after 1st sale before you can demand payment should be a violation of the US Constitution’s 14th Amendment - Due Process, but the OCC doesn’t care what I think. Now, because I haven’t found the statutory law giving an operator the right to delay royalty payments I have a call into an oil and gas attorney who should be able to give me the correct information concerning all the above.
Putting aside the regulations for a moment, there are oftentimes very good technical reasons to delay putting an early well on production until later wells are finished. The OCC and the companies want to get the best recoveries out of each horizon. They want the payback to happen as quickly as possible as well. Sometimes it comes down to economies of scale and availability of rigs and frac crews. Why pay for frac crew transport costs six times when you can pay once and get all the wells done at the same time. It is also a safety factor. You want a good crew to do your work. Also a technology factor-especially since this shale play is fairly new and the companies are investing in figuring out the best completion techniques to maximize the production. More of the companies are conducting microseismic tests using the first well as a listening well with microphones while they are frac-ing the other wells to listen for interference to see how many more wells need to be drilled and when. The goal is to use your drilling and completion dollars in the most efficient way in order to be able to gain more production dollars. A win-win for both the Working Interest owners (which includes many royalty owners) and the Royalty Interest owners. We all get paid in the long run-sometimes with a nice interest payment. Part of the six months time frame is due to the massive title opinions that must be conducted for the paying companies (often not the companies you have your lease with.) Some of these sections can have up to 500 owners, so that takes time. It is a complex business with many moving parts.
M Barnes, I totally agree with your assessment. The OCC did state; “that Devon was good about paying on time, but there were some that were not as prompt.” I still find it interesting that North Dakota has 150 day/18% law. http://www.ag.ndsu.edu/NDOilandGasLaw/mineralowners/royaltyclause
Hmmmm. I does not understand all I knows about this…
Attorney Charles McBride in Stillwater is thinking of retiring, so he doesn’t take on a lot of new work, but he is a fine attorney. I have several questions for him and will post answers. My family has a mineral trust and he has helped us for over 20 + yrs. Working for Chesapeake was an eye opener and I and left (on my own accord) because of their questionable business practices, so I do know more than I wish I knew.
Tim West, Thank you.
I still they have to pay 6 months from 1st day of production. Granted, they may shut the well during the rest of the exploration. But if they sell any product, the have to pay. The additional wells do not impact the title opinion or division orders of the first well.
Nothing in Oklahoma §52-570.10 has a provision to delay it because of an additional well. Spacing and pooling orders may be impacted and that would be within the scope of OCC rules. Payments are not.
See I hope we get it soon, cause my wifey gots this incurable disease called ChronicQVC-EtItis and that is why I hope it comes quicker oh hey, and more, too…
Ralph Harrison in Kingfisher does a lot of oil and gas work and is excellent. Several members on the forum have used him.
Here’s a very good recent article reporting on ‘The Scoop’ and ‘The Stack’. I have a subscription to this site, so hope you are allowed to access entire article. http://seekingalpha.com/article/1818562-meramec-shale-oil-play-unve…
From OK Statutes:
§52-570.10. Payment of proceeds from sale of oil and gas production.
A. All proceeds from the sale of production shall be regarded as separate and distinct from all other funds of any person receiving or holding the same until such time as such proceeds are paid to the owners legally entitled thereto. Any person holding revenue or proceeds from the sale of production shall hold such revenue or proceeds for the benefit of the owners legally entitled thereto. Nothing in this subsection shall create an express trust.
B. Except as otherwise provided in this section:
- Proceeds from the sale of oil or gas production from an oil or gas well shall be paid to persons legally entitled thereto:
a. commencing not later than six (6) months after the date of first sale, and
b. thereafter not later than the last day of the second succeeding month after the end of the month within which such production is sold.
- Notwithstanding paragraph 1 above, royalty proceeds from the sale of gas production from an oil or gas well remitted to the operator pursuant to subsection B of Section 570.4 of this title shall be paid to persons legally entitled thereto:
a. commencing not later than six (6) months after the date of first sale, and
b. thereafter not later than the last day of the third succeeding month after the end of the month within which such production is sold; provided, however, when proceeds are received by the operator in its capacity as a producing owner, the operator may pay the royalty share of such proceeds to the royalty interest owners legally entitled thereto at the same time that it pays the royalty proceeds received from other producing owners for the same production month, but not later than the last day of the third succeeding month after the end of the month within which such production was sold.
- a. Proceeds from production may be remitted to the persons entitled to such proceeds annually for the twelve (12) months accumulation of proceeds totaling at least Ten Dollars ($10.00) but less than One Hundred Dollars ($100.00). Amounts less than Ten Dollars ($10.00) may be held but shall be remitted when production ceases or by the payor upon relinquishment of payment responsibility.
b. Proceeds totaling less than One Hundred Dollars ($100.00) but more than Twenty-five Dollars ($25.00) shall be remitted monthly if requested by the person entitled to the proceeds. Amounts less than Ten Dollars ($10.00) shall be remitted annually if requested by the person entitled to the proceeds.
c. Before proceeds greater than Twenty-five Dollars ($25.00) may be accumulated, payor shall provide notice to the person owning interest as defined in Section 570.2 of this title, entitled to such proceeds that there is an option to be paid monthly for proceeds greater than Twenty-five Dollars ($25.00). Such notice to the person shall also provide directions for requesting monthly payment, and constitutes notice to all heirs, successors, representatives, and assigns of the person.
I know there has been an ongoing discussion regarding the payment of royalties following completion and first sale. As I read the statute, royalty owners with small interest could receive checks annually if their net interest was more that $10 but less than $100. See §52-570.10.B.3.a. b. and c. below.
From OK Statutes:
§52-570.10. Payment of proceeds from sale of oil and gas production.
D. 1. Except as otherwise provided in paragraph 2 of this subsection, where proceeds from the sale of oil or gas production or some portion of such proceeds are not paid prior to the end of the applicable time periods provided in this section, that portion not timely paid shall earn interest at the rate of twelve percent (12%) per annum to be compounded annually, calculated from the end of the month in which such production is sold until the day paid.
- a. Where such proceeds are not paid because the title thereto is not marketable, such proceeds shall earn interest at the rate of six percent (6%) per annum to be compounded annually, calculated from the end of the month in which such production was sold until such time as the title to such interest becomes marketable. Marketability of title shall be determined in accordance with the then current title examination standards of the Oklahoma Bar Association.
b. Where marketability has remained uncured for a period of one hundred twenty (120) days from the date payment is due under this section, any person claiming to own the right to receive proceeds which have not been paid because of unmarketable title may require the holder of such proceeds to interplead the proceeds and all accrued interest into court for a determination of the persons legally entitled thereto. Upon payment into court the holder of such proceeds shall be relieved of any further liability for the proper payment of such proceeds and interest thereon.
Thank you Vern James, I knew I had read that perviously, and even cut and pasted it here some time ago. Latest developement is that mostly water is coming up, and they are getting around 20 BOD. Well, I am reminded of a childhood song, “You’ll never get rich, digging a ditch, in the Army…” However, we should not lose site of what the CEO of OSAGE said in New York, nor in the fact of the amount of money OSAGE and others have put into this well. Plus the well just to the south is still going at over 800 BOD, and very few in the area produce less that 300 BOD. Stay optimistic, pray for big things, not little things.