New horizontal well


#1

T03N/R03W There is a new well planned for the length of Section 15 and I’m a royalty owner. I’m expecting to hear something soon but I haven’t got any news of what they are expecting or anything about a division order. I’ve looked at the OCC website but that looks like a steep learning curve. Any hints on getting news?


#2

Red Rocks has filed a Spacing, Location Exception, Pooling, and MUH. Look at CD No. 201708181, on the OCC Images website @:

http://imaging.occeweb.com/imaging/OAP.aspx

Are you leased or was your interest force pooled? EDIT: Guess you may be leased because there are secondary units covering portions of this Section. Likely you are receiving royalty checks from one or more of those units.

Going up one level, the OCC Imaging main page is:

http://imaging.occeweb.com/

The problem with this page is that you have to know the CD Numbers to search, except for the Well Records menu, where you have to use 1503N03W as your search criteria.


#3

Thanks very much. I was able to find some documents, but as I said, there is a learning curve, so I’m not sure what I’m looking at. I am indeed receiving royalty checks but a few of the wells have suspended production for safety reasons, so I’m just trying to see what I can.


#4

Debflyer, check your address on the OAP site documents and make sure it is correct. You should be getting all of these in the mail. 201708179 has a long list of respondents. Newfield has also filed. Check their list on 201800055


#5

Debflyer, Also, the Division Order does not come until about five months after first sales.


#6

So, this is new. I received a division order requesting signature. I have received no royalties yet. The producer is Red Rocks Resources, but they don’t hold the leases; so there must be some agreement that I’m not party to. They are positing a pay decimal for 1280 acres, sections 15 and 22. I don’t know anything about the actual production at this point. In the documents they are informing me that one of the leases to which I succeed as a party was perpetuated by production on “outside lands.” They are advising to review information this outside production. The lease was signed in 1944 and I have a copy, but I see no reference to outside lands and I don’t know how I would possibly confirm this since there has been production on the parcel since 1984. Ideas?


#7

What well is it for? Is the Division order a really simple one that is one page long and says NADOA at the top or is it complicated?

Red Rocks is the operator. They are in charge of paying the royalties.


#8

Debflyer: I will try to help. Red Rocks may not “hold the leases” to which your minerals are attached, but they have been designated the operator. The operator, in general terms, disburses all the revenue to other working interest owners, all royalty owners and overriding royalty owners. There are exceptions, but this is a general rule. That is why you received a division order from Red Rocks, they are the operator.

The 1280 acres is the “multi-unit” that the OCC has designated as the tract of land the production will come from. Your interest is determined by however many acres you own in the 2 sections, divided by 1280. Then it is multiplied times the royalty designated in the original OGLs and walla, you have your decimal interest in the production from the unit.

As for your question of outside lands, this is referring to the Statutory Pugh Clause that determined the size and scope of designated units. If your lease was part of an old unit that was smaller then 160 acres as established by the Corporation Commission, then those parts of your lease that were not part of the smaller than 160 acre unit are held by the then producing well. So lets say your minerals were part of a 40 acre tract. And lets say that the east 20 acres of your tract were designated as being part of a 40 acre unit (20 acres taken from outside your tract) that has maintained production, then the other 20 acres of yours are not part of the unit and receive no royalty. That is what Red Rock’s is meaning when they say held by outside lands. In this imaginary case the well can be on an adjacent 20 acre tract but it is part of a 40 acre unit that takes in 20 acres of yours. You cannot confirm this unless you go to the court house & do extensive review. However, you can request from Red Rock’s, that portion of the title option covering your tract to help you better understand your situation.

I have done many ownership reports in this part of Garvin County and it is a mess with all the different rules to go by, Pugh Clauses, Depth Clauses, Cessation of production clauses, Unitizations, etc, etc. There have been Oil & Gas Leases perpetuated by production in this area since the 1930’s so I have no problem believing that the old 1944 OGL that your minerals are subject to is still in effect.

By your admission, there has been production since 1984 so I would be willing to wager that the Title Opinion is correct.

Respectfully, Todd M. Baker


#9

Todd mentions the Statutory Pugh Clause.

I’m curious as to how the Statutory Pugh Clause applies to a 1944 oil and gas lease.

Be circumspect of relying on free legal advice from the internet.

Edit: there are two different waterflood (secondary) units pertaining to parts of Section 15, the Antioch Gibson Sand Unit and the Panther Creek Hart Sand Unit. To understand what the operator means by “outside lands”, you have to understand how a waterflood unit works. They are different from the Drilling and Spacing Units used in primary production.


#10

Mr. Pfisch. The statutory Pugh Clause was put in place in 5/25/1977 to protect this very thing from happening. Anything prior to that, tough luck as they say. Prior to that date, if your any part of your lease covers land that is part of a designated unit that is less than 160 acres those lands not included in the unit are HBP. I’ve been a landman for 35+ years-way before Al Gore invented the internet.

Thanks for your input.

Respectfully, Todd M. Baker


#11

What you say is generally consistent with my understanding of the Statutory Pugh Clause. But Debflyer told us the lease was signed in 1944, and she had a question about the meaning of “outside lands.” Your reference to the Statutory Pugh Clause was, IMHO, confusing since it is not applicable to a 1944 lease.


#12

The well is ADAM 1-22X15H. According to the diagram provided last December there are two holes to be drilled at the center/south of Section 22 and a horizontal well to run to the far north of Section 15. Our rights are all in Section 15. The form of order says Division Order at the top and is one page with an Exhibit setting out the legal description, BOI (?) and pay decimal. They were authorized to start this well in May, but I have no information on actual production, if any, from them. As to the order, the terms do not seem unusual when comparing to other DO’s in my files, but the Terms of Sale that “Purchaser shall compute quantity and make corrections for gravity and temperature and make deductions for impurities.” I don’t see that in the other Orders. I wonder if I should cross that out, or is that not subject to regulation?


#13

It seems like quite a reach. I have not seen the land since I was 9 so I don’t know for sure, but the information I have is that there are a total of 3 wells actually producing on the 100 acre parcel and a couple have been there since 1950, though I have no records of production going back that far. This is all interesting stuff however. Just trying to be a good steward and get some education. Thanks!


#14

HBP? Can’t figure that one.


#15

HBP means Held by Production


#16

If part of your old lease is under either the Antioch Gibson Sand Unit or the Panther Creek Hart Sand Unit, unit wells located on other lands (off lease) could be holding the old lease in force and effect. You have to look at the location of your land in relation to the units.

Go to: http://imaging.occeweb.com/imaging/OGUnitization.aspx

and search for

1503N03W

in the “Legal Location” box. You should be able to find maps or property lists in exhibits that show your land.

Are you receiving royalties on production from one of these units?


#17

OK I’ll give that a look. Thanks.


#18

https://otcportal.tax.ok.gov/gpx/gp_displayPublicPUNListSearchDownload.php You will find the Adams 1-22X15H in Sec 22 03N 03W

If you hit the blue PUN number, you can see the well and get the info. The production is usually about four months behind. First sales were 5/1/18, so you may not see a check until October or November.

I usually do not sign a company division order that has odd terms on it. The NADOA National Association of Division Order Analysts have come up with a standard form that is accepted in all states. Here is the 2017 one. If their division order is different than this one, then use the NADOA form instead. Just transfer the info over and make the minimum payment $25.
0_Division Order Model Blank Form 2017 (1).pdf (118.6 KB)

You do not want that deduction for impurities as it may cost you a bundle. You do not want the Division Order to change the terms of your lease. The NADOA form is very careful about that. Check your lease. If you have post production charges in it, then they are going to charge you for the impurities, but if you have an old lease, it may have “gross proceeds” and you do no want the DO to change that. Stick with the NADOA form.


#19

http://imaging.occeweb.com/OG/Unitization/002A1C20.pdf Here is the map of the Antioch Gibson Sand Unit. Look on about page 21

http://imaging.occeweb.com/OG/Unitization/00000001/OCC_OG_1PRLJPU_10OLRMM.pdf Here is the map of the Panther Creek Hart Sand about page 20 as well.


#20

Debflyer-you might find it interesting to look at the property on Google Earth. The center of Section is located at:

34.7319162, -97.5016834

Just copy that lat and long into Google Earth and search.

Use the “Ruler” function in Google Earth to locate the Section boundaries–1/2 mile in each direction from the center. These locations are not sufficiently exact for fence building, but are plenty accurate for seeing well locations in the Section.