So how we going to get this well drilled so I can take a working interest in the well and not have to lease, the North Dakota way.
In this country, we are a republic, meaning the local people run the state, and the state runs the federal… It is currently functioning the exact opposite, which is unconstitutional, but factual law is the locals have override… Unfortunately, we all have to waste our time along with our natural resources, in order to turn this mess around to work properly again.
For your North Dakota answer, the oil company has to attempt in good faith to execute an oil lease with Missouri, or they will force pool you, and you are subject to a “risk penalty,” meaning you pay for the well 1.5 or 2 times the well cost, which used to be free till 1999? Till they changed in favor of oil company… So, basically they get to use your money (oil) for free. During this payback, you are entitled to the average royalty in the spacing unit that other uneducated Missouri signed for in their BS leases!! It’s almost as bad as yours, but Oklahoma takes the cake on theft.. Jerry Spence Law Firm, I suggest…
I am not going to pay two times the well cost. I will pay up front.
Your payment should come from production, as how do they know actual costs up front anyway?
Mr. McKenzie, you could pay up front in North Dakota, but if someone does not have liquid cash to participate and won’t agree to a lease you will be force pooled. The operator recovers his cost of drilling plus a 50% penalty and once he does the force pooled mineral owner becomes a working interest. The force pooled mineral owner receives the weighted average royalty of what everyone else in the spacing leased for or 16% whichever the operator elects until the mineral owner becomes a working interest. It’s not the best but it is a position I enjoy. I’m looking forward to my checks to be 4 or more times what I would have received had I leased.
They don’t know the actual cost; it could be more or could be less. So in North Dakota, the oil company pays it all, gets a good well, takes the cost plus 100%, then what do they get after that? On the bad well they eat the loss or wait for years to get their money plus their 100%.
r w Thank you. I heard my Grandfather talk about something like that in Oklahoma when I was a kid. And they offer something like that in Operating Agreements for reworking wells.
The operator gets a 50% of actual cost of drilling risk penalty and if it’s a poor well, either because they picked the wrong area to drill or because they did a poor job of drilling, it very well could take them years to recover the cost, which does not bother me. To start with I didn’t ask the operator to drill a well, for another, the operator could have had a lease but he did not pay. My best well has produced 178,422 barrels of oil in 325 days production. What had been the worst well produced 14,800 barrels in 15 days in September, I think the operator was holding back a bit. How greedy and stupid do you have to be to not pay the bonus? Of course they killed any chance of leasing my brother also. The operator will survive without my brother and my small interest in these 6 wells and the other wells still to be drilled. If the operator drilled a really horrible well that went dry before he recovered his costs and the penalty, he could place a lien against the future production of your minerals, the minerals he couldn’t find or produce in the first place. I think the lien is hilarious. If the operator couldn’t get production, how long do you think it will be before someone else tries? By the time, if ever, your production has to satisfy the lien it might take a wheelbarrow worth of dollars just to buy a loaf of bread. Might as well place a lien against the air in my back yard.
Ron McKenzie said:
They don’t know the actual cost; could be more or less. So in North Dakota the oil company pays it all, gets a good well, takes the cost plus 100%, then what do they get after that? On the bad well they eat the loss or wait for years to get their money plus their 100%.
I don’t understand: You said your best well is producing 554 bbl day and your worst well almost 1000 bbl/day?
r w kennedy said:
The operator gets a 50% of actual cost of drilling risk penalty and if it’s a poor well, either because they picked the wrong area to drill or because they did a poor job of drilling, it very well could take them years to recover the cost, which does not bother me. To start with I didn’t ask the operator to drill a well, for another, the operator could have had a lease but he did not pay. My best well has produced 178,422 bbl oil in 325 days production. What had been the worst well produced 14,800 bbl in 15 days in September, I think the operator was holding back a bit. How greedy and stupid do you have to be to not pay the bonus? Of course they killed any chance of leasing my brother also. The operator will survive without my brother and my small interest in these 6 wells and the other wells still to be drilled. If the operator drilled a really horrible well that went dry before he recovered his costs and the penalty, he could place a lien against the future production of your minerals, the minerals he couldn’t find or produce in the first place. I think the lien is hilarious. If the operator couldn’t get production, how long do you think it will be before someone else tries? By the time, if ever, your production has to satisfy the lien it might take a wheelbarrow worth of dollars just to buy a loaf of bread. Might as well place a lien against the air in my back yard.
Ron McKenzie said:
They don’t know the actual cost could be more could be less. So in N.D. the Oil Co. pays it all get a good well, takes the cost +100% then what do they get after that. On the bad well they eat the loss or wait for years to get their money + their 100%.
I would be happy with the worst one.
Chipper, the best one IP’d at 2,698 barrels in 24 hours and has been produced almost continuously for the last year for a total of 178,422 bbl and produced an average of 1,175 barrels for many days. The one that seemed like it was the worst IP’d at 515 barrels and the company has only produced it at a trickle for most of the year about 13,000 barrels, until September. It seems the operator was producing one well because it alone would pay for the spacing. So the worst one produced 13k barrels for most of a year, produced 14,800 in September, 15,378 in October for a total of 42,756 barrels for the year. Neither well is being produced at the maximum rate. More wells are planned for this spacing but who knows when they will be drilled since the spacing is held by production and the wells already there are doing such a good job. The best well was completed with 24 frack stages and my “worst” was scheduled for 6 frack stages but the operator omitted 4 of the stages so it’s a 2 frack stage well, a cheapie. As I said neither well is producing at its maximum rate, the operator decides how much production they want and turns the valve accordingly, you might do well to remember that the well can be capable of 1,000 barrels a day and the operator may only produce it at 100 bbl a day or less and you have no control over it. Still better to be an owner than a lessor in my opinion, because that oil is coming out of the ground eventually.
R.W,
Thank you. This is very interesting to hear, how it all works. I am going to elect to be an owner.
Question: Royalty:
If your best well were mine, for example, and I was a 2% WI owner, would my annual royalties calculate like this?
178,422 barrels X .02 ownership X .82% royalty X $88 barrel?
How soon after the oil is in do royalty checks get issued, and thereafter is it monthly, quarterly, or?
Why do they put so many wells on the same “spacing” if the well next door is doing a good job?
Thanks again, this is great.
Chipper, R.W.'s wells are not in Oklahoma that he is talking about.
OK, thanks.
Other than to be a WI owner one has to put money up front. Is R.W’s situation very different than in Grady?
Do you have any statistics on oil production in the SCOOP, i.e., average barrels/day of the wells there?
Do you have any idea how many wells there get drilled that are dry or non-producers?
Where is your interest again?
Section 33 Township 4 North Range 5 West in Grady County spudded on Aug 5 but no reports on oil production.
It is too late to take a W.I. in that one. Don’t you have another tract?
Yes, we leased last year. Why I try to find production data.
The other one is the Newy well, coming right up. Pooling order probably soon.
Section 24, Township 3N Range 5W.
How could I find out about its prospects? I could do a 25% royalty or take a WI if it looks really promising.
Did you print off a map? The well southeast of 24 in 30-3N-4W tested at 325 BOD & 7100 MCF. 18-3N-4W northeast of 24 tested 204 BOD & 3100 MCF. How fast would a well have to pay for itself to be promising?
Chipper,
Back to the very first comment on this thread.
DO NOT WAIT UNTIL YOU ARE FORCE POOLED TO ELECT, if you what until you are force pooled then you are exactly that.
You should elect in the pre-pooling letter.