Neighboring well and payments

[Well_Wisher]

When you find out ANOTHER company is using their pad and will be including your sections in their wells, who pays you?

We found out the neighbors (different townships/range/section AND field) have a well with a pad located in their section 13 that was run under the section line and is a 4 section well heading south into two sections we have interest in.

Since the neighbor’s lease is with Kraken and our is with Chord/Oasis, how do the companies work out the payments, etc.? So far Kraken has sent out forms for taxes (1099 forms) and nothing else and of course with mail issues, we didn’t get ours yet, but some of the siblings did.

I have the “directional” information and know the above information is correct, however, the well in question is on CONFIDENTIAL status yet (I have the well file which warns it is confidential) therefore I hesitate to give the legal locations because of that.

I hope you can clarify these questions. Thanks so much!

[M_Barnes]

The operator will usually pay the royalties. It is quite common to have many working interest owners in a well who all lease independently, but only one operator. In some cases, the operator may have other working interest owners who take their share of the products “in kind” and sell them independently under their own contracts and will pay separately. I have wells that have two payments from two companies and they add up to the total amount required.