My parents formed an LLC last year and transferred all our land and mineral interest to it. I am the CEO and have been putting together all the minerals to keep track of them better. I ran across a mineral deed where my uncle left his 1/4 mineral interest in 160 acres to my mother. Upon further review, I found that my mother also has 1/4. Now she has 1/2 (80 acres) of minerals in Oklahoma. We live in the same county as this property, but it is is on the other side of the county so I do not drive by it. The surface was sold in 1998. Doing some research I discovered that an oil company drilled a horizontal well on the quarter next to it in October of 2011. First production date is December 27, 2011. We have never been contacted by the oil company to lease this property. It was changed to 640 acre spacing. I thought maybe it was just a 320 and did not include our minerals, but a 640 acre spacing was applied for and approved before the application to drill was made. Also checked and the farm was sold "surface only".
I sent a copy of my uncle's will and also the deeds proving my Grandfather gave each of his children (4 of them) 1/4 of the mineral. This should prove my mother has 1/2 now. I have no idea why the oil company missed this, and the other relatives with the other 80 acres were never contacted either.
Here is my question. What price per acre can we ask for the bonus when they finally come to their senses? Most of the land in this area in 2011 was leasing for $500 an acre. We know as we leased a farm near this one in 2011 for that. Now the land is leasing for $750-$800 per acre. Wouldn't it be fair to lease it to them for this price or do we have to settle for less. My thinking if they would give that, then they should at least give us the same as the highest price they paid to the other people leasing the other 480 acres.
Any comments? Are we sitting pretty or giving up the use of the monies due us for the last 18 months? It is a pretty good well according to the completion report to the Ok Corp Commission. We should at least get interest on the royalties and the bonus.
What is the legal description of the property? Can you give me your mother’s and LLC’s name? Feel free to send me a friend request with the info if you don’t want to post it.
I would imagine that your interest was force pooled, and that's all you will be owed as far as bonus.
If you can provide a Section-Township-Range, I will be able to tell you more.
MD
A couple of things to consider. 1)Spacing may have changed with the completion permit. 2) Don't set your sights too low by accepting a lease when you may be in a position to increase the theoretical lease income by 300%-400% depending on the circumstances for both sides.
Rick Howell knows exactly how to get tot he bottom of the situation as well as anyone. Take him up on his offer to help.
Also, you are my hero for organizing your minerals into an LLC. Great Work and much better to manage aggressively and indefinitely.
Thanks Gary. I did not want everything chopped up (land and minerals) when someone who would inherit could run away with all my parents and I have worked all our lives for. It is also a good way to keep everything in one place and not loose anything that comes in the mail to several people. The spacing is still 640 on the completion report. They got the letter and documents Friday and were calling me back when I called. Now no one calls back. Hmmmmm. Maybe they don't want me to stir the pot?
It is 15-23N-4WIM. How can you find out if it is forced pool? I cannot get my computer to work on the Corp Comm website with the Oricle Jinitator. I printed out all the new well browse had and that's all I know. Thanks for any help you could give me.
Hey Rick how can I email you? Email me at rofarm @pldi.net
Jordan,
It is 15-23N-4W.
Jordan Murray said:
I would imagine that your interest was force pooled, and that's all you will be owed as far as bonus.
If you can provide a Section-Township-Range, I will be able to tell you more.
Mr. Rodenberg,
Here is the Pooling Order 590350 http://imaging.occeweb.com/AP/Orders/0300D3DD.pdf
Here is the spacing order that includes a list of respondents. http://imaging.occeweb.com/AP/CaseFiles/02FFB26F.pdf
I see some of the family name you provided but not anything that matches. I’m sending you some more info by email. Garfield County files are not online.
You are correct that any property under 15-23N-4W should be getting paid from this well. Here is the completion report.
http://imaging.occeweb.com/OG/Well%20Records/1DD061B3.pdf
1) I guess you found deed from grandfather was filed in Garfield, did you research where it came from to verify he did own the mineral rights?
2) Was the uncle’s will probated? In Garfield Co?
3) The sale of the farm “surface only” deed many not have been correctly written and conveyed the rights to the purchaser.
3) The oil company may have made a mistake in the title search. I’ve seen it happen in the leasing process but is usually discovered with the title opinion.
See if you recognize the names from the spacing order as being related.
Well here are the answers...#1 My grandfather purchased the farm with the minerals in 1957.
#2 My mothers brother's will was probated and I have the document of final decree
where the minerals were transferred in 2006.
#3 The purchaser of the land does not show up on your list.
#4 I wrote you to what I think is going on!
Thanks Rick I really appreciate it!!!!
Mark
Probated in Oklahoma? What county, Garfield?
Rick thanks for the info. I find it not so funny that we leased a farm near there in 2011 for $700 an acre and the court said they only had to pay $100. Most of the other people were leasing for way more than that also!
In a pooling hearing all they take into account is target section and the surrounding 8 sections. Multi-section leases are discarded. Sworn testimony is required of prices paid, but who know. Be thankful the only option was 3/16. Many times the default is 1/8. I'd sure rather be stuck with 3/16.
Once you start getting it sorted out, you might contact the other parties on the spacing order and ask what they were paid.
With that price for the bonus I would say keep it and give us 1/4. I better see how good the well is 1st. If they won't give us the bonus because they already paid it, I guess that would be the best way to get it back.
A 1/4 was not offered on this one. That is not uncommon.
You may or may not have other options with a mistake of this magnitude. I would seek the advice of an attorney if I were in your shoes. It may be possible to claim participation with a working interest. Be ready for a court battle but it is not hard to get the production numbers needed to make that decision. I'm not sure I'd want to invest in one with an operator running it like this. ;)
You saw what it was making what do you think? Only thing my dad remembers someone telling him that they had messed it up but fixed it up a lot better. I know that they use pits to frac and not frac tanks, that tells me what kind of co. they are. Google maps just happen to have the well when I looked at the farm.
Yes this is getting beyond the scope of my practice I am a farmer/rancher. But I think I know of a good attorney that my like to get paid by that oil company.......
It looks like it made about 32000 barrels of oil in 2012 alone. That should be about $2.5mil. The completed well costs were 2.7mil, but if they had problems it should have added to that cost.
Would the OK Corporation Commission help or should we just bypass that avenue?
The OCC has a limited scope of power that does really include that. But I have seen orders opened back up because of similar issues. It is just not that common. I think it may usually be handled with the two parties. They could say ample notice was given with the advertisings although how many people even take the paper or live in those areas anymore. The law is aged, but I’m not sure what the solution would be.
Before I would personally attempt to travel that road, I would likely hire someone to verify your findings on the title trail. It sounds open and shut but I have seen title not be what it looked like many times. I can show you a dozen deeds tied to our holdings that conveyed property incorrectly or property that was not theirs to convey.
It does look like what you have is valid (adding the other info).