Looking for help on new wells being drilled on the leased area by Kerr-McGee. It seems the percentage of royalty payments to me is lower than previous wells producing on the same section. Is this normal. The property has been willed to me by my late mother. I was pooled in the last wells drilled by Kerr McGee which may have forced on me. I just want to make sure I’m being taken advantage of by the oil company. The wells are located in Weld County, in the Wattenberg field. Any help would be great so can understand why. Thanks in advance.
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If infill wells are being drilled, then it is normal for the pressure to have dropped and the volumes to be different that earlier wells. The royalty percentage such as 3/16th or whatever should match the lease or pooling from the earlier wells. Royalty amounts will depend upon oil and gas prices and volumes.
If you want to give the section, township and range we can check for vertical vs horizontal wells and give you more clarity.
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You need to give more information. Are the original wells vertical or horizontal? What was the spacing unit of the old wells?
What may be happening is that Kerr McGee is drilling horizontal wells and the new pooled spacing area may be much larger than the old pooled area. Your net royalty won’t change but it will be a smaller percentage of a larger area. For instance, if you were being paid 2% of the production in a 640 acre unit and they pool that unit with an adjacent 640 acre unit, your new interest is 1% of the new 1280 acre unit.
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Thanks for your reply jvt, That’s what I need to ask Ker McGee. I have leases for two other sets of wells pooled and now this new one. It could be part of that pooled area, because it’s near other wells that were pooled. In which case that would make total sense. That’s explains it perfectly