No lease No Pooling, Payne 7-18N-4E

This is all I can find on 7-18N-04E L1 L2 E2 NW. Grandmother last signed lease was in 1979. Well produce a few barrels, my understanding is that as long as producing lease is extended. But then 2005 a new lease was offered/recorded for cousin who also owns same undivided mineral rights of the 157.64 acres. Grandmother died 83 and probate document was filed in 85 with Payne Co with heirs and pencentage of mineral rights to each. Is there a reason for a new lease, maybe the well was shut down? If so How do I find out? Also if that is the case would they not have to force pool owners if they could not be found, instead they just kept paying in Grandmothers name. I am in the process of collecting the money now turned over to states but have no Idea if this is all of the royalties. Now the lease holder(A) that has/had the lease says they really only have 40 acres because one of the previous lease holders(B) sold rights to 120 acres from the orginal lease. Now both lease holders (A&B) have assigned leases to (C), (C) says royalty is 1/8 but the 2005 lease was for 3/16. I do not know if this is worth hiring someone or not. Where can a history of a well be found?

THANKS

Your question has a load of information in it, so I'll try to offer what expertise I can based on the information given. But I am confused by your legal description: "L2"? Are you trying to say "lower half"? That would be S2 E2 NW, and that would contain only 40 acres, not 157.64. And either a creek/riverbed borders one of the boundaries of the land, or this Section 7 is in what is called an "irregular section" shorted acreage during the original survey to adjust for the curvature of the earth. If it wasn't for the "L2" I would look in the OCC website for you to see what producing wells I can find on or near that legal description.

That said, I assume the "probate document" you're talking about is a probated Will?

You also ask if there is a reason for a new lease. There could be several reasons. One possible reason is if all of the minerals were leased at the time the first pooled unit was formed, but the Declaration of Pooling filed in Payne County either described incorrectly, or inadvertently left out the lease covering your cousin's interest (a different lease from yours because it likely was willed to him from an uncle or an aunt? And not from the same ancestor from which you got your interest?). Another possible reason is that the lease under which your cousin owns mineral rights contained a horizontal Pugh clause (a "depth Pugh" causing depths below the deepest drilled or producing depth to automatically expire on the trigger date specified in the lease). Your lease probably does not, if it was a 1983 lease. Many leases back then contained a vertical Pugh ("surface Pugh" clause) requiring surface acreage outside a producing unit to expire, but didn't contain a depth Pugh also. So if a new well was proposed for a deeper depth in which the lease covering your cousin's interest had expired, a new lease would be required, but the legal description in it will clearly state "LIMITED TO" and then state the depths, or say "LESS AND EXCEPT" and state the depth from the surface down to the base of the currently producing horizon.

You say that lease holder "A" says that they only have 40 acres out of the original (157.64 acre?) lease because the other 120+/- acres were sold to others. If your 1983 lease didn't have any kind of Pugh clause in it, putting 40 acres of it into a unit will hold the other 120 acres, and someone else could be holding them for future drilling.

It does sound like you have money that has been "escheated" as unclaimed property (paid over to a state government agency as abandoned by your grandmother). What you may not know is that if the "holder" never had any address for your grandmother (not even the state of her last known residence), the money would have been paid over to the state in which the holder is incorporated (or franchised). So without knowing which oil companies over the years might have paid money to the states as unclaimed property, you will need to literally sit and research for lost money in your grandmother's name IN ALL 50 STATES. No kidding.

After this, your information gets very murky. Who signed a lease in 2005? You? Your cousin? If it's your cousin's lease, it very likely could have a 3/16 royalty rate--the modern "base rate" for leases. Your 1983 lease, however, would continue to be paid the 1/8 royalty reserved in it.

A history of "the well" should be available in the OCC website--and like I said, if I knew what you meant by "L2" I could look it up for you, see what information I can find. Payne is in north central Oklahoma, where successful horizontal oil wells are coming in. You need to find out the status of your mineral rights, find out who the operator(s) are of the well(s) on or near your land (and your leased land is pooled in).

Land Payne Co 07-18E-4E, Lot1, Lot2 and E2 NW containing 157.64 more or less. Producing well Snyder Estate for 40 years and now Hildebrand 7-1MH which is on 06-18N-4E and Lateral Hole on Sec7. All the mineral rights in this came from gggrandfather so everyone owns the UNDIVIDED rights just diff percentages. I spoke to CHER which was the last lease holder before they assigned the lease to Calyx and they did not find out about the missing 120 acres for some time after they purchased the lease; they issued the 2005 lease for cousin but did not know why.. They have now assigned the lease to Calyx. I will call them and see if I can get some more information from them. But they do not seem to be on the ball when I spoke to them. Maybe I should contact some 2nd/3rd cousins. My cousin is the one that has the 2005 lease. Also Calyx sent and recorded a lease for my share but said they are going to file a release on it. Well History on the OCC only has operators and purchasers of the oil. Where can I find production records to see if maybe it stop/shut down and that is why a new lease was signed or ????. Two companies beside Cher have assigned leases to Calyx for this property (ATT) I feel a lawyer in my future.

2256-PaynewatermarkedBook002081Page07190723.pdf (1.7 MB) 2257-PaynewatermarkedBook002114Page02750283.pdf (3.08 MB)

The first attachment (Landers & Waldman to Calyx) is a "farmout assignment". It is a farmout and assignment combined into one. Calyx has until February 25, 2016 to file a Declaration of Pooling (or other applicable document) creating a unit including the 117.64 acres covered by the farmout assignment. This means Calyx is already planning to drill a well, but needs sufficient time to finish their title work and get all leases voluntarily that they probably still need. The remaining 2-1/2 years is also enough time for them to file an application for involuntary pooling (force pooling) if needed. But the well must be completed as a HORIZONTAL producer in the Mississippian and/or the Woodford formations, and no other formations, in order for the leases to vest in Calyx and not automatically revert to L&W.

Then the second assignment you attached is a "sell-down" assignment. Calyx entered into a Participation Agreement with Liberty (PA Agmt) back in 2009, obligating Calyx to participate in any well drilled under the PA Agmt, contributing 30% of all of the capital costs and expenditures for each well. Calyx retained the other 70% entitlement to earn from L&W the leases listed in Exhibit "A" on or before February 25, 2016.

I took a look at the OCC records, and according to the imaged documents there, the well name was changed in 2011 to "Wayne Snyder #1" from "Snyder Estate #1", but I couldn't find any production records under either name. But even if you do find production information, it likely will be older than 4 years and unless I'm mistaken, Oklahoma has a 4-year statute of limitations on claiming back royalty payments. What was supposed to happen is that your royalty revenues were supposed to be paid over to either the state in which you reside, or the state of incorporation/registration for CHER and each of their predecessors-in-title over the years, including Natural Progression Company (one of the previous operators back in the 1990's). You will have a lot of researching to do in the Change of Operator forms for the Snyder Estate #1/Wayne Snyder #1 to track down the names of all of the previous operators who could have escheated your money to the state under the name "unknown suspense".

If I were in this position, I would look forward first. The current address for Calyx is in the assignments you attached. Calyx operates the Hildebrand 7-1MH that had first production 5/15/2013. Under Oklahoma law, they have until 11/15/2013 to pay royalty owners from first production forward. Calyx has a website with an Owner Relations tab allowing you to email them. I recommend you do that right away. State the Hildebrand 7-1MH as the well name, then give them your full name, address, name of your deceased mother, and give them the lease information from the Exhibit "A" in the assignments that applies to the 1979 lease your mother signed, if it's there. If it's not there, then that's a pretty good indication that her lease did, in fact, expire, and they likely are trying to find you. Or, you can verify that they know who you are and your current address, but they haven't issued the division orders yet.

The assignments you attached here indicate that an active farmout is in the works and Calyx definitely will be drilling a "test" well followed by other wells if the test well is successful. Good luck.

I have a copy of 1979 lease (ATT). So as far as the Snyder well, I have found most, if not all who are holding the royalties. I just do not know why it was not sent to Calif. Called OCC they did confrim that the well did not cease production but production was like 2 b. per day. So forward.. Calyx has my information, I received a Divsion Order of 1/8 which is from the 1979 lease. I also have a copy of a lease they sent my mother and recorded in Payne in March, but they email and said they are filing a release beacuse "Per the title opinion, the 1/8 royalty on the lease is valid" My mother does not remember much about this, and being sick at present I really do not want her to get upset. I also discussed this with OCC about offering the lease then not honoring it, have not heard back since they had to wait for Calyx to call back. I do not know much about leases and have attached the 79 lease. I am wondering about the gas from well, How much is in the good range? Should the DO also state any gas royalties or just the oil. I have to send the DO back so checks can be issued at end of month. I think they tell people that, so they see $$$$ signs and they rush. Thanks Gina****************************MARSHA THANKS FOR INFRO********

Thanks for the additional information. The lease that Calyx took back in March is what we call in the industry "a protection lease". There appears to have been a question of whether or not production had held the 1979 lease, and they finally decided that it did. So the March lease was never valid and needed to be released of record in Payne so that the WI owners' rights would not be "clouded" by it. But hey--look on the bright side. Your mother gets to keep the bonus consideration she was paid for the March lease. At least that's a plus. Now that the new well has come in, the old Snyder well probably has already been temporarily abandoned, waiting to be permanently plugged and abandoned. The production from the new well now firmly holds the 1979 lease--the Snyder well (and its ongoing costs) is not needed.

You say that you are wondering about the gas from the well--which well? The Snyder or the new well? I thought I saw in the records that the new well is classified as an oil well, not a gas well. If I'm correct, then the gas is the secondary product and might not even be marketed if its expected to only be a "gas cap" off the reservoir. They might flare it (burn it at the wellhead) instead. They are allowed to do that if all of the leases say that royalty must be paid only on "gas produced, saved and sold" or "gas produced and sold". Oil is king right now, so the value of the new well is in the oil produced and sold.