I inherited 80+ acres of land with 100% mineral rights. They are drilling a well on my neighbor that I have been informed that I will pool in to. I am completely ignorant to anything to do with oil business. My question is.....monetarily, what is the difference of having the well on your land or pooling in???
Labrina,
Since you only own 80 acres, you will need to find out what the spacing of this well is. If it's 640, you will only get 8 % of the total of whatever % you have in your lease.
Labrina, There is no difference if you are part of the same section, as Virginia says above. The landowner may benefit from payment for surface damages or use of his resources such as water but your royalitys will be paid in proportion to the amount of mineral acreage you own and your royality percentage. Example 80/640=.125(8%) x .1875 (3/16)= .0234. if the well makes $50,000 per day you get .0234 x $50,000=$1170 per day.
Your land doesn't get destroyed!
Labrina,
Like Susan said, you are the lucky one, no damage to your property and you still get your share of the money.
I love Michael way of figuring, but you would have to have a well producing about 470 bbl a day to get that kind of money. Good luck.
Labrina, I don't know the pooling rules in your area but some places not all of your acres need be pooled. Maybe Michael will weigh in on this.
Virginia, I admit to being an optimist but the well I have a small interest in, the Poteet 1-17H in Stephens Co. Okla. is producing 260bopd and 7mmcftd "wet" gas, do the math. It is a new well and I realize it will decline over time but I don't think my numbers are too far fetched.
R.W., Labrina is in Texas and what little I know is in Oklahoma. Every horizonal well I have heard of in the last couple of years is a 640 acre drilling and spacing unit and the whole section gets pooled. I'm sure there may be exceptions I don't know of. I don't know about Texas.
Thank you Michael. Labrina, in TX they don't necessarily have to pool all of your acres. Not alot to be done about it, check your division order closely when you get one.
Michael,
I live in TX and we have 4 pooled gas wells within our area spacing, so I do know about pooling. If you are saying that the well is bringing in $1170 per day for the full 640 spacing that is probably right, but when you divide that down to only 80 areas, I would think it would be a little less. I don't want Labrina to think she was going to make that kind of money per day for a long time. Also, the first check is always big because it take several months to get everything set up.
Most of my land/minerals are in Oklahoma and their has been a few H. wells that came in at 500 to 700 bopd in my area. I am pooled in several wells and one H well is spaced on 360 A, Yet most wells are spaced on 640. This well isn't hooked up yet, so I don't know what it will make, but I own all my minerals under the 160 that is being pooled and would be surprised if it makes that much and stays at that rate within 9 months. It may come in at a great rate, but usually within a year or so, they start going down fast. I have had too many wells to know that it doesn't last long at the great rate. I have seen lots of people lose their farms because they thought the big checks would always come in.
I not saying it can't make $1170 per day for only 80 A, but it's going to take a really good well to do that. I am glad you have a good well and hope it keeps going.
Labrina,
You may want to google for this:
Pooling for Horizon wells: Can they teach an oil dog new tricks.
It's wrote by a college in Colo, forgot which one, but very interesting.
Good Luck.
DISCLAIMER: The calculations I gave to Ms. Greenwell were strictly an EXAMPLE. It was based on verifiable production of another well in another state. As they say in the weight loss ads RESULTS MAY VARY. Please forgive me for giving anyone false hope.
Michael Hutchison
Michael, you were just giving an example of how to figure royalty, of course you used a well, known to you, because that's exactly what I would have done as it involved the least work. I'm sure nobody is holding you responsible for the level of production of their well good or bad. There aren't many posts on this forum that the caveat, your milage may vary, does not apply.
Michael Hutchison said:
DISCLAIMER: The calculations I gave to Ms. Greenwell were strictly an EXAMPLE. It was based on verifiable production of another well in another state. As they say in the weight loss ads RESULTS MAY VARY. Please forgive me for giving anyone false hope.
Michael Hutchison
Thanks R.W. As usual you speak with the voice of reason!
R. W. and Michael,
I didn't mean to sound harsh on this. Please forgive me.
You gave a very good example, I just didn't want her to have false hopes. I have see people who haven't had oil/gas wells in the past set up their life style on the first check they got. Only to find out the checks got smaller and they couldn't meet their payments.
Thank You Virginia,
No harm done. As a bit of a newbie myself I will heed your caution.
I agree, it's good of you to care.
Virginia Pflum said:
R. W. and Michael,
I didn't mean to sound harsh on this. Please forgive me.
You gave a very good example, I just didn't want her to have false hopes. I have see people who haven't had oil/gas wells in the past set up their life style on the first check they got. Only to find out the checks got smaller and they couldn't meet their payments.
I am sorry for the late response...I want to thank all of you who replied to my question.....I just talked to a "landman" yesterday who had me sign an agreement to let them make a road on an easement through the place that I inherited.....they offered to pay me, but instead of getting a much needed road from the highway to the back of my place I also talked them into installing a new set of culverts and gravel over a wash on the driveway to the old house located on this land. He said I will eventually be pooling into 7-8 wells...so needless to say I am slightly excited, but I will keep my expectations low just in case! Again thank all of you!!
Labrina,
I would sure like to be working with you if I was an oil company. First, they would have replaced any culvert that needed replacing. Second, they usually gravel all the road. I would also ask for a locking gate if you have a house on this property. And on easement, you are usually paid as this will go on the farm title. That is wonderful that you will get that many wells. What county and state did you said this is located?
Virginia 7-8 wells....I guess it's too soon to say I told you so! Just Kidding!!
That's great news Labrina!
Labrina Greenwell said:
I am sorry for the late response...I want to thank all of you who replied to my question.....I just talked to a "landman" yesterday who had me sign an agreement to let them make a road on an easement through the place that I inherited.....they offered to pay me, but instead of getting a much needed road from the highway to the back of my place I also talked them into installing a new set of culverts and gravel over a wash on the driveway to the old house located on this land. He said I will eventually be pooling into 7-8 wells...so needless to say I am slightly excited, but I will keep my expectations low just in case! Again thank all of you!!