Can someone explain exactly what this means as far as 1) am I getting paid for MY exact oil or just a formula for “estimated production” and what else this means 2) what is a “test procedure” for and what are they testing. 3) what other pertinent information I need to know. The “procedure” seems common but I’ve heard negative things and am not sure why. Application of Oasis Petroleum North America LLC pursuant to NDAC § 43-02-03-88.1 for an order allowing oil, gas and vapor recovery unit gas produced from the Iceman Federal 5601 34-05 2B (File No. 40622), Iceman Federal 5601 34-05 3B (File No. 40579), Iceman Federal 5601 34-05 4B (File No. 40322), Iceman Federal 5601 34-05 5B (File No. 40578), Section 1, T.156N., R.102W. and Sections 5 and 6, T.156N., R.101W., Berger 5601 13-4 2B (File No. 42848), Sections 4 and 9, T.156N., R.101W., Orcas State 5601 13-4 2B (File No. 42842), Orcas State 5601 13-4 3B (File No. 42846), Orcas State 5601 13-4 4B (File No. 42847), Sections 4, 9, 16 and 21, T.156N., R.101W., Rooster 5601 12-8 2B (File No. 42524), Rooster 5601 12-8 3B (File No. 42525), Rooster 5601 12-8 4B (File No. 42526), and Rooster 5601 12-8 5B (File No. 42793), Sections 8, 17 and 20, T.156N., R.101W., Tyrone Field, Williams County, ND, wells to be commingled in a central production facility located in the NESE of Section 34, T.156N., R.101W., allowing for a test procedure for each well of a minimum of 48 hours per month, pursuant to NDAC § 43-02-03-48.1, or granting such other relief as may be appropriate.
The wells are allowed to be produced into a common facility and the monthly production is allocated to the individual wells based on monthly tests on each well. There will be a separate smaller facility that is used for the individual well tests. The advantage is lower facility costs and theoretically longer well life. If the wells are mature the production will be fairly stable and errors should be minimal. Newer wells are far more variable and monthly tests may not be frequent enough. But remember the potential error is just as likely to be in your favor as not.
Thank you. All of the Rooster wells are brand new, still confidential, but i I don’t know about the others.
This is a common North Dakota oil and gas request, but it’s important because it affects how you get paid.
You are not paid based on the exact oil from your specific well. Instead, multiple wells are combined into one central facility, and total production is measured. Your share is then estimated using formulas based on periodic testing and historical data.
Each well is tested for at least 48 hours per month. During that time, they measure oil, gas, and water to determine that well’s percentage of total production. That percentage is then used to estimate your share for the entire month.
The key point:
Your royalty is based on an estimated allocation, not continuous direct measurement.
This system is widely used because it’s more efficient and reduces costs, and it can increase overall recovery (including capturing gas that would otherwise be flared). However, it also means:
- You’re relying on the operator’s calculations
- The 48-hour test may not perfectly reflect the full month
- Small errors in allocation can impact your royalties over time
You are also now tied to the performance of multiple wells, not just one.
Overall, this is standard practice and not a red flag, but it does reduce transparency and precision slightly.
Bottom line: You’re likely fine, but your payments are based on estimates, so it’s smart to keep an eye on your production share.
Good next step: Ask for monthly test results, allocation methods, and production by well so you can monitor accuracy.**
Thank you forbthe very detailed explanation. Several of these wells included are wells i haveva share in, so that is good too, i imagine.