Mike 1-7-6XHW

Has something happened with Mike 1-7-6XHW? Had something lined up on minerals but they backed out because “there were some issues with that well”. Is that just they’re way out of what was quoted or has something really happened with the Well?

Please add your township and range.

Sorry, thought I’d done this, Section 6 1N 5W

Martha, have you seen my topic, Continental Purchase Lease I Gave Camino? When you have time would you download and take a look at the table (PDF) I made to show the discrepancy between the royalties of Camino vs. CRL? S21-T01S-R04W

A few general comments about Cam/CLR.

Henry Hub is a spot price for a certain grade of gas so is just that, an estimate for sales in the Louisiana hub, so to me, only useful for a general, up or down guide, not a comparison for OK prices which are usually lower.

CLR is going to have a different contract for their gas than Camino. Some have long term contracts; some have short. Some are “better”, some are “worse”. Some operators sell to themselves or their own subsidiary, so that may be a factor.

Each well is going to have a slightly to largely different BTU content dependent upon many factors.

Over time, the BTU content of the wells will change.

With gas wells, over time, they will need more and more processing to actually get gas to market as the pipelines need to have a consistent line pressure, very little water, etc. so post production charges usually go up.

Read your lease. If you have a clause that says No Post Production charges, read it carefully. Many of them have a phrase in there that starts with “, however” which allows the charges right back for making the product more marketable. If you have a pure No Post Production charges clause, then send a copy of your lease and a demand letter to stop charging them as of when they started charging you and demand interest for the difference. Send by Certified Mail Return Receipt and keep a copy of the letter, the copy of your lease and the return green receipt in case there is a lawsuit. If you do not get a copy of the green receipt, use your tracking number at the USPS and get their delivery receipt and add it to your documents.

The Harmeyer 1-7-6XHW may have been drilled instead. It spud in March. Should be finished fairly soon.

Here is the “however” I got with the Cost Free clause of the lease;

however, notwithstanding anything to the contrary, Lessor’s royalty shall bear the actual costs incurred by non-affiliated third parties to transport or gather the production off the leased premises ( or lands pooled therewith), its share of all applicable production, severance and other taxes, and shall bear any such costs which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted from Lessor’s share of production so long as they are based on Lessee’s actual cost of such enhancements.

Oh well.

Yup, that is the “gotcha”. On the one hand, you are getting a higher value on the BTU since it got to market instead of being stranded, but they are charging you for that service. The words in the clauses matter.

Banner Pipeline is one of CRLs subsidiaries. Does that make any difference if Banner Pipeline doing the downstream gas transfer and producing?

Not knowing their contract situation and whether Banner is processing your well, really could not make a statement.

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