What does “plugback” mean? One of my mineral rights hasn’t been paying and that what it says online. Do you think it will resume activity?Thanks!
If you cite your well’s API number, experts on the board may have a better idea. It sounds like a producing well that stopped, or “shut in”, possibly some sort of workover?
You can ask your operator, and hope for a timely answer. Also, as a first step, I Google-search unfamiliar terms like Plug Back, there is a wealth of helpful websites with oil & glass terminology, I search “petroleum, plug back” and various websites say it means cementing off the bottom of the wellbore, either to stop water or drill into a different formation. Another terminolgy website is “Oil and Glass Drilling Glossary” and Texas Railroad Commission “RRC.Texas.Gov” has a basic glossary.
Thank you. Yes I did google but wasn’t sure if I’m terms of mineral rights it means I’ll once again receive royalties on it. It seems like from how I interpreted it, they are looking to drill from a different point in the same spot. And will that make it more profitable…
Is it your royalty stub that reads “plug back”? Suggest you ask your operator. Hard to guess inasmuch as not clear whether your well is old or new, vertical or horizontal, and performance of offset (neighboring) wells in your vicinity. Yes, plug back could be a beneficial workover … but I’m not one of the experts on this board.
Yes that’s what the royalty stub says and when we asked they just said it’s closed for maintenance. It is old (inherited). I’m getting a pretty decent offer to purchase and struggling on what to do. Im trying to do as much research as possible. Thank you for responding
You could ask them to elaborate, tell them you’re considering selling, but sounds like plug back for repair/workover. Please be careful if you sell your minerals … a rare asset where buyers know more about the asset than seller. Most mineral owners advise never sell unless money is needed for some compelling purpose. Lea and Eddy Counties are so productive they could join OPEC, producing from the wonderful Wolfcamp formation, and can also drill different levels of Bone Spring formation or deeper down in Wolfcamp if gas prices rise.
I think buyers will pay you only for your Proved reserves, zero for your unproved future Probable/Possible reserves. Moreover, they fix & limit their bid on your proved reserves to guarantee themselves a low risk double digit return, not to cheat you but guarantee themselves a safe return on your proved reserves. Thus, they gain your Probable, Possible or Potential reserves for free.
They drilled a deeper zone and produced it initially. They are plugging and going back up the hole to develop another zone. All it means is abandoning a layer and going back up hole to another prospective pay.
I appreciate this advice as I am really struggling on weather to sell or to keep. What if the resource becomes depleted and my offer goes to nothing later on? They’ve been in my family for 40 years, at some point the royalties will run out I assume? Right now it’s about $8500 per net acre.
I appreciate this advice as I am really struggling on weather to sell or to keep. What if the resource becomes depleted and my offer goes to nothing later on? They’ve been in my family for 40 years, at some point the royalties will run out I assume? Right now it’s about $8k per net acre.
I understand your stress in deciding about an arcane asset, and possibly getting ripped off by selling cheap. Its impossible for experts on this site to advise not knowing your mineral location.
Royalties often outlive royalty owners, some sell because they prefer lump sum cash instead of leaving the annuity to heirs after they die. Experts on this site could provide a wealth of info about your minerals, but only if you give location (state, county, PLSS section). Your section location reveals many things you do not mention … is your vicinity fully developed or are new wells being drilled (?), how old are the wells in your section (?), what is the publicly disclosed well production in your section (?), who is the operator (?). Publicly available completion reports reveal the depth of your well(s) and offset wells, which explains how deep & what geologic formation is being drained.
If you’re shy about giving your location on this site (you don’t expose your personal financial situation, just section location), and if your royalties are $8,500 per month (per year?), you can pay for a full blown mineral appraisal for $3,000-$5,000, and you can probably pay for a less-formal but professional valuation estimate for a smaller sum. If you have relatives trying to decide to hold or sell, they might share the cost.
I made 10k for all of last year and just accepted an offer for 10k/acre. no going back now.