Mike-
I am not sure if it’s vertical or horizontal- I can tell you that I know my family have leased our mineral rights for 15% and on the web I see that the oil company has a 47% working interest- so does this mean that between my family, land owner and pool that we will be getting a piece of 53% of the production off the well?? So my family should be able to take 15% X53% of the production? Ofcourse I realize that each family member has their own % of the 15%. . Thank you again for everything you have helped with I feel that everyday I have a little clearer understanding on how everything works.
Mike Igau said:
Lou: Is the well a horizontal drill or vertical drill? A horizontal well can have horizontal legs of around a mile. It does not matter if the well is on top of your land in this case. This type of well could consume a few hundred acres and it would have to be pooled. If it is a vertical well then statewide rules on well spacing and depth of formation would come into play so as not to infringe upon your neighbors mineral property. This can get a bit complicated. It sounds like you have an undivided interest to your 50 acres with other Family members. In this case your decimal interest would be prorated according to each Family members share of ownership.
Lou Wheeler said:
Thank you for the info. As all this is new to me and my family. We own the mineral rights on 50 acres and the well is right on top of our section also I asked the state of ND to send me a print out of the production and it says Pool status: F do you happen to know what that means? Do you think we are in a pool? Or could “F” mean family? Are all wells in pools who makes up the pool? Since the well is on top of our section I would ?? who else would be in the pool besides my family.
Thanks again-
Lou
Mike Igau said:
Lou: Do you own 100% of the minerals for this well? Are there other mineral owners involved with this mineral property? A drilling permit should indicate if the well location is pooled or not. The State’s Oil and Gas Commission has rules for pooling and unitization. In Texas we can go to our Railroad Commission’s web site, which is our Oil & Gas Commission, and find the information on pooling, certificate of pooling, etc. You might contact your State’s Oil & Gas Commission to get the data you need.
The Formula: The example, I have for calculating your decimal interest is as follows:
Assuming you have 80 net mineral acres out of a 640 acre section of land that is pooled for this well, then:
80/640 X 3/16 = .0234375 RI
It is your net mineral acres divided by the total pooled acreage X your royalty interest rate. That is my understanding.
Lou Wheeler said:
OK because I am new at this I guess I don’t understand the second part of your answer.
“Assuming your in a Unit, your net mineral acres will be divided by the total unit acreage and multiply by your royalty interest rate to get your decimal interest.”
I know my letter will show the decimal interest. what is a unit and how do I know the total unit acreage?? Like are you talking about a unit being like a section of land? and unit acreage how many sections is in the well?
Sorry …I think I am now totally confused. can u give an example? I understand that market value and production will change daily.
Thanks-
Lou
Lou,
Your well is a horizontal well. When they drill these wells they pool all the leases into 640 acre or 1280 acre drilling units. The operating company has 47% of the acreage leased and another company or several others control the remaining 53%. Your family royalties depend on how much acreage you all leased to them. Assuming you leased all the acreage of the operator, your family would receive 47% x 15%. If you leased 80 acres, your family would receive either 12.5% x 15% or 6.25% x 15% depending on whether it is a 1 or 2 section drilling unit.
-Phil
Phil: That is interesting. It sounded like Lou had a horizontal well and was pooled. What we were trying to determine is the Division Order “decimal” interest ownership to which the net proceeds of the production would be applied on royalty interest payments.
Using 640 acres as the pooled acreage and Lou’s mineral interest is 50 acres with a 15% royalty interest rate the decimal interest would be calculated by this formula:
50/640 X .15 = .0117187 RI
Now assuming Lou’s undivided interest is 1/3 of the Family’s ownership then Lou’s individual decimal interest would be:
50/640 X .05 = .0039062 RI
I hope I am reading this correctly but rules may be different in N Dakota than Texas. This seems logical as it calculates the percentage ownership of the total pooled net mineral acre ownership then multiply by royalty interest rate.
Philip Mollner said:
Lou,
Your well is a horizontal well. When they drill these wells they pool all the leases into 640 acre or 1280 acre drilling units. The operating company has 47% of the acreage leased and another company or several others control the remaining 53%. Your family royalties depend on how much acreage you all leased to them. Assuming you leased all the acreage of the operator, your family would receive 47% x 15%. If you leased 80 acres, your family would receive either 12.5% x 15% or 6.25% x 15% depending on whether it is a 1 or 2 section drilling unit.
-Phil
Ok guys you have been a great help. My next question as you might guess is about pooling. Our well is in section 31 -and someone told my sister that if they drill in section 29, 30 or 32 and 33 that we would be in that pool is this correct info do you think? How do you know if you are in a pool or not?
Thanks-
Lou
Mike Igau said:
Phil: That is interesting. It sounded like Lou had a horizontal well and was pooled. What we were trying to determine is the Division Order “decimal” interest ownership to which the net proceeds of the production would be applied on royalty interest payments.
Using 640 acres as the pooled acreage and Lou’s mineral interest is 50 acres with a 15% royalty interest rate the decimal interest would be calculated by this formula:
50/640 X .15 = .0117187 RI
Now assuming Lou’s undivided interest is 1/3 of the Family’s ownership then Lou’s individual decimal interest would be:
50/640 X .05 = .0039062 RI
I hope I am reading this correctly but rules may be different in N Dakota than Texas. This seems logical as it calculates the percentage ownership of the total pooled net mineral acre ownership then multiply by royalty interest rate.
Philip Mollner said:
Lou,
Your well is a horizontal well. When they drill these wells they pool all the leases into 640 acre or 1280 acre drilling units. The operating company has 47% of the acreage leased and another company or several others control the remaining 53%. Your family royalties depend on how much acreage you all leased to them. Assuming you leased all the acreage of the operator, your family would receive 47% x 15%. If you leased 80 acres, your family would receive either 12.5% x 15% or 6.25% x 15% depending on whether it is a 1 or 2 section drilling unit.
-Phil
Not necessarily. If I knew the township and range of your mineral rights, I could give you a more definite answer.
-Phil
Phil-
Where is this info located at? Township is Ross ND- Well is RossAlger 6-7 1-H Location is SESW 31-156-92 also, since you said that most drilling units are 640 acre or 1280 acres does that mean any drilling(well) that comes within 1280 acres of our well we would get a pc of?
Thanks-
Lou
Philip Mollner said:
Not necessarily. If I knew the township and range of your mineral rights, I could give you a more definite answer.
-Phil
if you go to: https://www.dmr.nd.gov/oilgas/. Go to the map server and you may have to play around with it for a little bit. I believe your well is a 2 section spacing.
So what does that mean exactly??
Philip Mollner said:
if you go to:
https://www.dmr.nd.gov/oilgas/. Go to the map server and you may have to play around with it for a little bit. I believe your well is a 2 section spacing.
OK so, Mike you are right I own 1/3 of the 15% Royalty. So, my question for you guys would be how much $$ should I expect to receive per barrel of oil. I have no concept. Just approximately do you think .50 or $1.00 p/barrel? I realize these are all estimates.
Thanks-
Lou
Lou: I am afraid your going to have to wait for your Division Order. There is no way for me to tell how many acres your pool contains for this well. Your total pooled acreage will dictate your decimal interest. Your initial check should be large due to the accumulation of production over a three or four month period. After that it should be based on monthly production. That is my understanding.
Lou Wheeler said:
OK so, Mike you are right I own 1/3 of the 15% Royalty. So, my question for you guys would be how much $$ should I expect to receive per barrel of oil. I have no concept. Just approximately do you think .50 or $1.00 p/barrel? I realize these are all estimates.
Thanks-
Lou
That’s ok Mike I figured that would next to impossible to answer- I appreciate all of your help.
Lou
Mike Igau said:
Lou: I am afraid your going to have to wait for your Division Order. There is no way for me to tell how many acres your pool contains for this well. Your total pooled acreage will dictate your decimal interest. Your initial check should be large due to the accumulation of production over a three or four month period. After that it should be based on monthly production. That is my understanding.
Lou Wheeler said:
OK so, Mike you are right I own 1/3 of the 15% Royalty. So, my question for you guys would be how much $$ should I expect to receive per barrel of oil. I have no concept. Just approximately do you think .50 or $1.00 p/barrel? I realize these are all estimates.
Thanks-
Lou
You should be able to find your property and the pooling info on the ND State oil site. We received our first royalty check Oct 1st from a well that started producing in May. Our division order came the same day. Dont be afraid to call the operating company with regards to your division order, if there is an issue its better to be proactive and resolve it early.
Lou Wheeler said:
That’s ok Mike I figured that would next to impossible to answer- I appreciate all of your help.
Lou
Mike Igau said:
Lou: I am afraid your going to have to wait for your Division Order. There is no way for me to tell how many acres your pool contains for this well. Your total pooled acreage will dictate your decimal interest. Your initial check should be large due to the accumulation of production over a three or four month period. After that it should be based on monthly production. That is my understanding.
Lou Wheeler said:
OK so, Mike you are right I own 1/3 of the 15% Royalty. So, my question for you guys would be how much $$ should I expect to receive per barrel of oil. I have no concept. Just approximately do you think .50 or $1.00 p/barrel? I realize these are all estimates.
Thanks-
Lou
Thank you DeeAnn I appreciate the info
Lou
DeeAnn Solberg said:
You should be able to find your property and the pooling info on the ND State oil site. We received our first royalty check Oct 1st from a well that started producing in May. Our division order came the same day. Dont be afraid to call the operating company with regards to your division order, if there is an issue its better to be proactive and resolve it early.
Lou Wheeler said:
That’s ok Mike I figured that would next to impossible to answer- I appreciate all of your help.
Lou
Mike Igau said:
Lou: I am afraid your going to have to wait for your Division Order. There is no way for me to tell how many acres your pool contains for this well. Your total pooled acreage will dictate your decimal interest. Your initial check should be large due to the accumulation of production over a three or four month period. After that it should be based on monthly production. That is my understanding.
Lou Wheeler said:
OK so, Mike you are right I own 1/3 of the 15% Royalty. So, my question for you guys would be how much $$ should I expect to receive per barrel of oil. I have no concept. Just approximately do you think .50 or $1.00 p/barrel? I realize these are all estimates.
Thanks-
Lou
My question is, how can a energy company pay you signing bonus on per acre of land, but have no idea what to pay you for months and months until a division order is made up and sent to you to tell you what you own for minerals? Do not trust these mineral companies, they are here to make money and the more money for them, the better for the company. People trust the company is making all the right transactions for them, but who is to question there figures? Have a friend who knows about oil and gas leasing or a oil and gas lawyer go over your leasing proccess from start to finish unless you are up on leasing. It will pay in the long run. Once you sign, you are stuck! Companies usally do not pay until after three to four months of production and and you have signed your division order and returned it to company, then they will cut a check after the first week of the month and you will recieve it about three weeks into the month, so about five month after production you should recive your first check if your lucky.
I have mineral rights in Burke County. The well started producing in May of this year. I received my first royalty check the first week of October.
Hal
Thanks Hal- did you get paid for gas and oil production or was it just for the oil production?
Lou
Hal Stoen said:
I have mineral rights in Burke County. The well started producing in May of this year. I received my first royalty check the first week of October.
Hal
Oil only sir. I read on one of these forums though that the gas is burned off the first few months of production. The check was for the first month of production (May) and the next three months (June, July & August).
Lou Wheeler said:
Thanks Hal- did you get paid for gas and oil production or was it just for the oil production?
Lou
Hal Stoen said:
I have mineral rights in Burke County. The well started producing in May of this year. I received my first royalty check the first week of October.
Hal
Thanks Hal for the info we are still waiting for payment on our well for both.
Hal Stoen said:
Oil only sir. I read on one of these forums though that the gas is burned off the first few months of production. The check was for the first month of production (May) and the next three months (June, July & August).
Lou Wheeler said:
Thanks Hal- did you get paid for gas and oil production or was it just for the oil production?
Lou
Hal Stoen said:
I have mineral rights in Burke County. The well started producing in May of this year. I received my first royalty check the first week of October.
Hal
I don’t know if it always works this way, but our “heads up” that a royalty check was forthcoming was our receipt of a “Division Order” from the oil company (Oasis). We had to verify that we were the mineral rights owners. We received our first check about 3 weeks after we filled it out and returned it to them.
Lou Wheeler said:
Thanks Hal for the info we are still waiting for payment on our well for both.
Hal Stoen said:
Oil only sir. I read on one of these forums though that the gas is burned off the first few months of production. The check was for the first month of production (May) and the next three months (June, July & August).
Lou Wheeler said:
Thanks Hal- did you get paid for gas and oil production or was it just for the oil production?
Lou
Hal Stoen said:
I have mineral rights in Burke County. The well started producing in May of this year. I received my first royalty check the first week of October.
Hal
Hal- this is what we heard too from Brigham Oil that they send that letter first. I don’t want to get too into your business but was your check what you thought it was going to be? Like in our case we own 15% royalties on 50 acres of land and find that it is hard to guess what we might be receiving. Brigham ha 47% working interest so is our 15% based on 100% of the proceeds or the 47% or 53%. Seems like so many variables come into play. Thank you in advance for any light you might be able to shed. Lou
Hal Stoen said:
I don’t know if it always works this way, but our “heads up” that a royalty check was forthcoming was our receipt of a “Division Order” from the oil company (Oasis). We had to verify that we were the mineral rights owners. We received our first check about 3 weeks after we filled it out and returned it to them.
Lou Wheeler said:
Thanks Hal for the info we are still waiting for payment on our well for both.
Hal Stoen said:
Oil only sir. I read on one of these forums though that the gas is burned off the first few months of production. The check was for the first month of production (May) and the next three months (June, July & August).
Lou Wheeler said:
Thanks Hal- did you get paid for gas and oil production or was it just for the oil production?
Lou
Hal Stoen said:
I have mineral rights in Burke County. The well started producing in May of this year. I received my first royalty check the first week of October.
Hal