Hello everyone! I finally got the letter stating Ascent is ready to start drilling in June 2022. I asked about the minimum amount Ascent cuts a check for is $100. If not that much, wait until it accrues to that amount. In that response from Ascent, he reminded me there are 3 units on my acreage. Does that mean the production from 3 units are part of one royalty check? Is just one check or three depending on which unit is producing? This may seem like a stupid question, now that I am writing it, but this is all new to me. I am supposed to see the first royalty check come September or October. He is out of the office on vacation so I thought I would post this here to all the great folks on this forum. Thanks in advance for any information!
If the same operator then all on one check.
Yes, same operator. I’m thinking 3 units are better than one. Thanks for the info!
Coro, are you sure that they said three UNITS and not 3 wells ( horizontal legs ) in YOUR UNIT ? If it’s 3 Units, then you should have separate paperwork for EACH unit that was formed ( DPU, etc. ). You should get only one check if it’s the same operator and 3 wells. If we’re talking UNITS, then you will get paid as soon as the wells in each UNIT are completed and turned to sales. In that instance, you should receive a consolidated pay stub/ monthly breakdown and you will get paid for production as soon as ( 60-90 days ) the wells in each UNIT go into pay status. One check either way, unless there is another operator in either of the other UNITS.
Hi Jenna, This is the response I got from the landman… > I was forwarded the e-mail you sent concerning your lease in the Blayney SW unit. Please note that your lease is also in the Blayney S and Blayney SE units as well. These units are currently being drilled and are anticipated to start producing sometime in June. Typically the first royalty checks are mailed out about three months after production starts, with subsequent checks being mailed out monthly after that.< Every time Ascent sends me paperwork, I always get 2 separate packets of information, I never understood that, but it seems to be exactly the same information, not pertaining to 2 different units. (Unless I’m missing something) Looks to me I have 3 units, not 3 wells. When I look through the paperwork, it the units are on tract 28, there are 11 Lessors and Ascent is the only Lessee. My confusion is that information I am sent from Ascent reads…”Blayneys S WHL BL Unit”. Also, only one lease number. Why doesn’t the paperwork have the S, SE and SW in it as this landman states in the email? It only has “S WHL Blayney Unit”. What does having 3 units mean anyway? Does that mean I receive royalties from 3 units rather than one? Thank you so much for responding. I totally respect your knowledge, this is a complicated industry!
Coro: You only have one well currently producing, the Blayney SW Unit. When the other 2 units, the Blayney S & Blayney SE units begin production and checks are released, you will have 3 producing units and all of the production will be shown on one check, with separate entries for each unit. Generally speaking a Unit contains 1 well. If a Unit has more that 1 well, it means that ALL of the owners under the wells are the same. If wells have separate ownership, it means it is a different “unit”. Your interest will be in 3 different units meaning there will be different ownership, hence 3 different units. Hope that helps with the confusion.
Ok, so do my other relatives that signed the leases share in those 3 wells also? (Per the % of acreage each person inherited) All the ones listed under tract 28? There are 11 of us. And here I go over thinking again…if the SW Unit is currently producing, why is Ascent waiting for the other units to start producing to pay out royalties? I am looking at the list of names, on that sheet at the top it has tract #, lease #, lessor, lessee, lease date, recording information, instrument #, tax map parcel number…is the recording information #, BK 850, PG 612, what I would use to find out more about the units? And what is the instrument # mean? (201900007208) Thank you, Todd, for taking the time to help me out, very much appreciated!
Have you tried going o the ONDR website and reviewing the unitization application and chief’s order for the unit. It will answer all of your questions.
No…but I will. I didn’t know they would help me with Ascent paperwork. Actually. I should just email the landman! Geez…this is all exciting but complicated. I’m sure once I get the next packet of info from Ascent, which they say will come in June, I will understand more. Thanks for your help.
you can view your parcel or the wells on the ONDR well viewer online map: https://gis.ohiodnr.gov/MapViewer/?config=oilgaswells
The instrument # (201900007208) references the document number in Belmont County where your lease is recorded. You apparently own 2.3148% or roughly +/-1.14 acres out of 49.17 of the minerals under Parcel 50-00564.000. Because of the shape and size of the parcel, it is spread across 3 single well Blaney Units.
The Blayney SW has a single 15,950’ well bore in the 415 acre unit. Your parcel has 5.722 gross (0.132 net) acres in the unit. The Blayney S has a single 15,295’ well bore in the 377 acre unit. Your parcel has 37.251 gross acres (0.862 net) in the unit. The Blayney SE has a single 15,612’ well bore in the 343 acre unit. Your parcel has 7.571 gross acres (0.175 net) in the unit.
Thank you for all of this info. I am the information gatherer for a few of the family members. They are asking if there is a way to estimate their royalties. I see a formula online to insert numbers but I have no clue exactly what numbers where. Of course we own different percentages. I’m telling them we have to wait for production numbers in June. Is there a way to estimate value of royalties at this point? We don’t have any drilling for minerals up here in Wisconsin. Fascinating to say the least and I have a feeling the energy companies want to keep as much of the money as possible. Next will be figuring out the taxes. From what I’ve learned, it is not considered ‘earned income’ as far as SSI goes, but is taxed as ‘earned income’ as far as the federal government goes. Thanks again for your time and info.
Your royalties will be based upon the net acres, the royalty and the prices of the product every month. The Division Order documents from the wells will give the net decimal interest and that can be used to calculate the estimated royalties. Keep in mind that the first check you get will be from several months of production and will be the largest. Wells naturally decline, so volumes will decline over time (as will checks depending upon prices). Wise to discuss incoming royalty income with your accountant to plan for a tax strategy.
Thanks for this info. I am sure once the first check comes I will understand more. Trying to explain this to relatives is another challenge at this point in time, but they too, will understand more come September or October (according to Ascent). Are they saying September or October due to that being the end or beginning of a certain event or something?
Apparently my response to you was not permitted by the moderator, not sure why… best of luck
Your state oil and gas commission may have a mineral owners guide which can explain how things work in your state. A general guide is listed in the Mineral Help at the top of this page. Good place for the novice to start. NARO (National Association of Royalty Owners) has several booklets that are helpful. A good primer is “Look Before You Lease” by Jim Stafford. It can be ordered through the NARO website or was on Amazon at one time.
Oh? Ok….thanks. Maybe a response to what happens in September or October. After some thought, maybe it’s the end of Q3? Check inQ4?
Yes, I did join NARO. Great place to keep informed. Great advice!
Not sure of the timing in your state, but in OK, once a well is drilled, it takes about five months to do all the title work for the hundreds of owners. Then they send out the Division Orders to be signed. Verify that your decimal interest is correct and sign, send back with a W-9. I do not use the company Division Order. I use the NADOA (National Association of Division Order Analysts) form which is available on the NARO website or I can upload a copy for you. Once your Division Order is received at the operator’s office, they will put you in pay status and begin cutting the checks. The DO will have your net ownership shown in a decimal and that is how you calculate your royalties. Save a copy of your division order and put in your files. Send it back by certified mail return receipt so that you know they received it. That DO is what you are waiting on that will hopefully show up in June or July.
Great info. I was told June to look for the DO in mail. I need to make sure it’s accurate info according to my lease and % owned. Thanks again!
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