now fracturing
I have been approached by Devon to build a pad on my land for three wells, one for my section, one for the section south and one for the section SE. I have a couple of problems with this. One, we are talking about 18 tanks venting off hydrocarbons south of my house. (they are putting in 6 per well), Two, all the noise associated with well pads, compressors etc. Three, they are only offering me 25K for 5 acres in the middle of my best hay pasture. Four, I don’t really want two other wells that I don’t have an interest in, on my property. I have several questions for the group. What is the highest price anyone has heard for leasing a 5 acre pad for production? I know that Osage gave my neighbor 52K for his pad. Can I just offer them a lease to put a pad on my land for my well only? (They can force me to comply for a well on my section, but what about wells for other sections?) Have you ever heard of getting any interest in the other wells in exchange for drilling rights, and what would be a fair interest to ask for? Please ponder these questions as you drink your coffee this morning.
Regards,
Rob Brian
Oh, one more question. Can I ask them to paint their tanks green to blend in with the local vegetation on the lease for the pad? I hate white tanks.
Robert, my thoughts are that if I owned 5 acres of both land and mineral rights, I would certainly ask for (near to the point of demanding,) all of the rights you muse in your mind, plus I would demand a hundred dollars per person per entry as a door charge and a thousand dollars per person for any and all exit charges. Plus all popcorn and other concession rights.
Don’t forget taco and salsa rights.
Robert, in an oil and gas deal, everything is negotiable all depending on how much clout you have and how firm you are ready to stand. If the operator has the right to produce minerals of yours, you can’t stop that well. On the other hand, they don’t have the RIGHT to explore someone elses minerals from your land. I believe you could literally demand as much as it would cost extra to build another pad elsewhere to allow the wells you have no interest in to be drilled from your property. and if they won’t pay it, they can go elsewhere.
Robert, you could demand a overriding toyalty interest in the other wells. I have seen where landmen, geologists and others have been paid with an ORRI, which I believe would start paying you as soon as the well paid for itself. Since this would be equivalent to a working interest, even 0.5% could be a fair amount of money for a decent well. It would give you a stake in the production of the wells not draining your minerals.
As for the venting? It’s going to happen and nobody has control over which way the wind blows.
As for noise, there will be noise. I have seen sound baffles elsewhere and you make be able to negotiate sound baffling as is used in and near cities.
It’s all about how much comfort you are willing to give up for how much money and how much money the operator is willing to pay for convenience.
You could have more clout if your oil and gas lease does not include a pipeline easement or if there is not an electricity easement to cross your land but if all else fails they could have to run a generator which would be more noise, If you have not given easements yet, or in your lease, I would hold those in reserve.
There is going to be noise, smell and some traffic no matter what since you yourself are going to have wells. Only you can decide if more of the same is worthwhile for the money you can negotiate.
how many hundred of feet is the pad from your house
Robert,
Why don’t you get ahold of Virginia. I think she may be able to give you some good ideas on how to handle this sort of thing since, I believe she’s dealt with the same thing on her farms, too!!
I am interested in the timeline and the forms and documents from Well Completion forward:
What is a completion report? When is it filed and available to the public?
What is a rest report? When is it filed and available to the public?
Who issues the Division Order [land co, oil co?] When and where is it filed and available to the public? Do all royalty holders receive a copy?
When are Production Reports filed and how can the public gain access to them?
its,OCC, form 1002A…,COMPLETION report
Kaye, where is Virginia, I think she still reads, but I miss her notes of wit and wisdom. She did not deserve the criticism.
Best I can tell OCC scans documents almost on the day received. I suspect it is loose rules for filing and little or no oversight. Public companies like Osage blast it out to the world, a little company. Not sure what a biggie like Devon does. Private companies keep it to themselves. Anyway we see permit after permit after spud after spud. Yet little completion and production info.
Reportingsw over in Payne County have a well at over 800 bod, Alfalfa county has a few over 1500, and I still believe what we thought as impossible until recently, breaking the record for Oklahoma at 7100 bod is in the IMMEDIATE future for Logan County. Then, the deeper they go, all current exploration theories will go out the window.
Thank you r w kennedy. Once payment for the pipeline easement is made how is the tax treatment? An Ohio State U paper indicated that the damages are paid just like payments for the easement. Years ago I was told that damages for a drill site and road were used to reduce the basis in your property and not reported until the property is sold. (never) And upon death would be lost when the property received the step up basis for the new heirs. If this is true then I allocate damages to reduce the basis and “payment” for the lease as income or a “sale” of some of the property rights and would pay capital gain on Schedule D? If the buyer of the right of way sends in a 1099 for the full amount then the IRS will want to see the allocations I suppose. Sounds very tricky for reporting.
Anyone had experience with reporting pipeline easement income?
I have read here that Oklahoma has special increased taxes in all of these mineral matters if you live out of the state of Oklahoma, and it is pretty hefty extras, I hear.
very good advice r.w. This is kkw husband and for some perverse reason I have enjoyed the challenge of guessing these things out. Being one of the few left who do pencil returns I always get a reply within a month or so from IRS outlining my mistakes and most of the time getting a return of funds to apply to next years taxes. Recently, I did battle and LOST over the necessity to file Form 8949 the new Sch D back up form. Now that was a very interesting education. It looks like 8949 will allow IRS to flag returns from Capital Asset sales that r subject to tax payer fudging and should result in more honest reporting and thus greater revenue to pay our countries bills.
Sure would be nice to see a Completion Report once in a while.
I really think OCC is not keeping current with their reports, mostly because of budget matters. Then there are tornados and other weather things, including an occassional earthquake.
When I lived in Miami, Okla, we had a one room safety storm cellar, very comfortable but it leaked. Now I HEAR that the reason they do not have more storm cellars in the Okla City area is that every time they dig to make one, the hit OIL???
KK Witt, an oil and gas lease should just be an oil and gas lease. If the pad and road goes on your property, that is separate from the oil and gas lease for your minerals or should be.
Easements for pipeline and electric should be separate also. If the gathering pipeline is NOT a common commercial carrier carrying others oil for profit, you don’t have to allow it, unless the laws of Ok are different from everywhere else. An oil and gas mineral lease is for the production of your minerals and that is all the lease should be for.
An oil and gas lease should be for oil and gas, not surface, lease of your house, car, hunting, fishing, water, pipeline or electrical easement. Just an oil and gas lease please.
The operator probably does not want their line to be a common commercial carrier because anyone can then buy capacity in their line and if the operator further develops their lease and needs that capacity, it’s no longer there. If the operator has to declare their line a common carrier and have your property condemned, you could make that quite expensive for them and they don’t want to go that route.
A pipeline easement can lower the value of your entire property not just the part the line goes across. You should be compensated for the diminished value of the whole and not just temporary damages to a portion of your surface.
If you do grant an easement, there should be a temporary easement to allow them to install the line and the permanent easement should be the width of the pipe. Why is that you may ask? Because if they have a large permanent easement they can come in and tear it up again whenever they want and not compensate you for it and you deserve damages again for the loss of use of your surface and the inconvenience. If you give them a large easement, you might as well sell them that land because it would be more theirs than yours now, because they could interrupt your use of the entire easement at any time they felt like it. There may also be tax and liability advantages to selling the easement.
The way these all inclusive oil and gas leases are, there are many working parts and the operator hopes you will just throw in alot of freebies when they are probably already getting 80% of your oil and gas for an extremely low price. It pays to separate what is oil and gas lease and what is not.
Opps I met to write conventional vertical wells.