Obenco north of athens

So obenco has well equipment moving in just off. Cr 2709 henderson city. They are holding on 2800 for our 58 acre 3 yr lease with option with 1/6 royalty.....yet the other landman dropped off a 4500 check today for the pipeline row ? My question is still if I don't sign the mineral rights for the above price and they hit oil am I left out????? This stuff is worse than buying a new car!!

It depends. Are they actually drilling on or under your tract? You should be able to pull the permit and plat of the proposed drill site and lateral (horizontal wellbore if it is a horizontal) from the Railroad Commission.

Assuming that OBENCO does drill a horizontal that includes your property, the odds are very high that they will make some production (O&G). It may not end up being economic to them as to "paying out", but royalty payments are not impacted by the operator's economics.

If they aren't drilling on or under my land then why do that want my mineral rights?

Did you sign an oil and gas lease? did you sign a Right of Way Easement? Is the easement for the same lands as the OGL?

Thank you for the reply but I don't understand? I'm a bit thick headed! So they pay me 2800 with 3 year option 1/6 royalty. Then they don't drill under my land so I get no royalty? But if they do drill under it I get royaly?

If I don't sign I'm out 2800 with no royalty But the can drill I to same pocket of oil across the fence and that guy gets the royalty?

do you own all the mineral under your 58 acres?

You only get royalty payments if your acreage is in the drilling / production unit for the well in question. These units can be anywhere from 160 to 700 acres for a horizontal well.

Wells have to be either 330' or 467' off the unit line. So if you own the acreage just outside the unit, you get nothing from the well.

Drainage distance away from a lateral varies by formation and stimulation approach. A well that is 330' off a unit line may access some oil and gas from across that line, but not much if the reservoir is of a type that does not allow for extensive drainage lengths.

There are a lot of details and intricacies to this whole issue - lots for you to learn

They will want offsetting rights for another well in the future - very common and normal practice.

A company may lease thousands of acres before drilling their first well

You are correct about it being more complicated than buying a car. Hopefully members here can help. I'll try my best here, and apologize for the lengthiness. I'll preface this by saying I am not an attorney and this is not legal advice. This is my understanding of the concepts based on my experience in the industry. If anyone sees anything in the following text that is incorrect or lacking, please by all means correct me and elaborate. Also if you want to talk to an actual O&G attorney, someone here can recommend one.

When a new well is drilled, surrounding acreage is usually pooled into a unit. This allows the operator to hold the acreage, keeping their leases in effect, if they want to drill down into it later. The Texas Railroad Commission (which regulates oil & gas activity in Texas, "RRC") has spacing requirements so the operators form these units to meet those requirements and hold as much acreage as possible. This is why you don't see oil wells back to back to back, like you see in downtown Kilgore (though those are replicas, they did used to actually be that close together).

They could be drilling near your land, but not directly on/under it, and choose to pool/unitize your acreage into a unit, if you are leased. Some vertical gas wells (where they drill straight down into the earth) may be turned in 640 acre units and pay royalties proportionately to all owners of the acreage included in that designated unit. But they really only drilled on a ≈1 acre tract, and pooled the other 639 acres to make a unit. Pooling is addressed in the lease, usually the 5th or 6th paragraph of a typical lease form. Look for "80 acres" and "640 acres" and that's likely the paragraph that stipulates their right to pool.

If you are not leased and not part of the drill site or within a certain proximity of the wellbore ("drillsite" includes a wellbore under your land, the rig doesn't have to literally be on top of it) then yes, they may not pool/unitize your tract into the unit, and would not pay you any royalties. You have much more leverage negotiating the lease if you are drill site, in which case if you don't lease you will still get paid your proportionate share, BUT you will also pay your share of the production costs. Unleased, you would be considered a working interest owner, which may also carry additional liabilities. It's usually easier to lease the minerals.

All that being said, this is a fact specific situation. It may even turn out to be an allocation well, where they only include acreage within a certain distance of the wellbore and do not actually "pool" anything into a unit. This is a fairly complicated concept that I won't go into. It would be very long and I'm not an expert on it.

I would gather more info from the Railroad Commission. Either online, google TX RRC GIS, open their mapping system (make sure you go to the new system which is similar to google maps), then search by county then survey, click the "i" identify tool and find the permitted, proposed well. Look at the legend, but I believe the symbol for a proposed well is a hollow blue circle, and you should be able to see the lateral on the map. Then review the plats and other info on the permits to figure out where the well will be drilled and how the wellbore will traverse. If you provide all relevant info, there is usually someone on this forum that will help you find it if you are having trouble. It's not the most intuitive site though is has improved greatly. If the permits/info is not yet online (they sometimes wait as late as possible to file it, and it takes the RRC time to upload it), then you may have to go to Kilgore to look at it and get copies. Again, IMO it's usually easier and in the minerals owner's best interest to lease; you do want to get the most favorable terms possible. Personally I would ask for a higher royalty and accept a lower bonus amount. If the well produces, the mailbox money in the future will likely be much more than the initial bonus. There's also a plethora of information on this site about certain provisions in the lease that will be favorable to you, the Lessor, that you may want to try to get included. Hope this helps. Good luck. I submitted a friend request if you want to accept it and message me outside of these boards.

As I understand it, I own 1/4 of them . yet they don't want access to a quarter of my land. Lol they said they could put a well anywhere on the 58 acres?

SO you own more land than the 58 acres but only minerals under the 58 or you own minerals 1/4% under how much contiguous acreage?

We own a total of 58 acres, of that 58 acres the granparents sold 3/4 of the mineral rights so the landman says. So that leaves us with 1/4 mineral rights on the 58 acres. Somewhere in the talk he had with us I think he said that obenco was offering like 200 dollars an acre so I was thinking 12, 000 ball park. Then he says it calculated to 14 mineral acres for a total of 2800? But he also said if they chose to put a drill site on our property they could place it anywhere on the entire 58 acres?

They could place it anywhere within reason if they have any of the other minerals leased, but you can negotiate surface use in your lease, if you own the surface. Otherwise you wouldn’t really care.

yes the price of the per acre is proportionate to your net acre interest so you would only get 1/4 of the lease money. What was the easement money for? a pipeline? Have they already put it in? Did you sign an easement for your surface rights?

So 20 years ago we signed an easment for a 6 inch line to go across x feet of land and it was x feet wide to be for instance 3ft each side of the center of the pipe. Now a different obenco land man paid us an additional 4500 ( just got check this morning) to replace with a 12 inch pipe so to keep the " from center of pipe figure " right they essentially needed another foot times the length to do that.

Have not signed a mineral rights lease. Only signed the easement row papers

CHRIS, YOU NEED TO GET AN ATTORNEY! If it costs you all the lease bonus or the easement money it is money well spent in the long run. You could and should have asked for 1/5 royalty minimum. You only own 58 acres. It can take up to 5 acres for a temp drill site depending on the target and if vertical or horizontal wells. The fact that they just delivered a check to you without signing an easement is also troubling. Not that it is not their right to the leased lands but you have rights as a surface owner as well. An attorney can help you negotiate where they drill, how they enter the property and exit, how long they have to get it done and how long they can keep the rig there. I know of times when a rig was held on the property for over 6 months. They had drilled a dry hole and didn't want to remove it until they had a place to take it for a new well. You do not want this. You do also realize that once drilling starts it is always a 24 hr operation with lights up all night? you need to be concerned about trash, waste and storage of items. If they have 3/4 of the minerals leased you can't stop them but if you get an attorney you can get a foot in the door on what is being done on the surface. Those of us on this page probably know our stuff pretty well regarding these issues but an attorney carries more weight with these guys. Trying to figure out what to do here is like talking to a mechanic over the phone and him trying to walk you through it step by step. The mechanic (the attorney) needs to be on site looking at your options (the engine). My best advice and sound opinion.

You are looking to the future not to what is happening right now regarding your rights and any royalty.

so is this a new and extra line right next to the existing line or is it a new line because the original easement gave rights to multiple lines in the future? It makes a huge difference. If the original easement did not give them the right to replace or add another line you should have had to sign a new easement. Did you?

sorry just saw this after my other post.