Ovintiv USA has mailed Division Orders for two new horizontal wells in 23&26-3N-5W. The final orders for these wells [OCC #750227 and 750229] state the length of drilling in each section, and it looks as though Ovintiv has used those proportions to calculate the royalty decimals for payments that ought to begin next month. Is it really that simple? I understood that allocation of royalties due from multiple-section wells depended on the actual costs incurred by the driller in each of the sections involved–not just bore length.
The allocation to each section is determined by how much of the well’s perforated lateral, the completion interval, lies in each section
Pretty simple in OK. Net mineral acres/actual spacing acres x royalty x percentage of perforations in your section.
You do not have to sign a DO in OK in order to get paid, but you do need to send in your W-9 if you agree with the decimal percentage. Use the magnifying glass for a “Letter in Lieu” template letter. Send by certified mail return receipt.
Much obliged, Charles and Martha. I’ve been assuming something more complicated because of language found in an earlier well application (2020): “Actual allocation of such costs, production and proceeds may vary depending upon the results of the drilling and completion of the multiunit horizontal well.”
What happens if I get processed into a unitized ( not the right pppterm; I forgot) after opting for minimum bonus but without being able to negotiate a lease?
Are you asking about forced pooling? Where several options of bonus/royalty pairs are offered at the competitive rates for that spacing.
Or a waterflood or nitrogen flood Unitization which is a completely different beast. Those wrap up the existing leases and forced pooled royalty percentage, but calculated new decimals based upon the new giant acreage unit.
Thanks, Martha. It is a forced pooling. Yes, I am still kicking; 95 in October.
You are awesome!
If you are force pooled in OK, you will have several options to choose from. I usually take the highest royalty option as higher royalties from a (hopefully) successfulf well or wells for many months to years will far outweigh the one time higher bonus from a lower royalty. You have 20 days to answr the order. I suggest 10 days and send by certified mail return receipt and keep a copy in your files.