rw,
Thanks. We paid the cash call of $1228.86 each in June 2012, which they told us was our up front money, do not know how much more we would owe. There are three of us; today they told us there is a problem with the well for the past 2 months [well is down] so do not know what that means. It is so very frustrating, I also believe they are very poor on the billing and revenue parts of the companies; they love to get the revenue but don't like to refund anything. On the second well, my one brother has gotten almost 4,000.00 for his part and my other brother and myself have only gotten 1,100.00 each., so they don't even have that right. We do have legal counsel, but they have not done much to put a fire under this oil company as they have been very difficult to deal with on both the wells. We can only hope it will get better. Thanks again.
Pat Maloney
r w kennedy said:
Pat, I don't know how many of you there are participating in the 8 acres, so I don't know how much you paid in total, but the cost of a well per acre can be 4 to 7 thousand dollars per acre. If you paid what they billed you, it's probably their fault for not billing you the correct amount, but that wouldn't stop them from holding your proceeds until your part of the well is paid for, and beyond just for good measure.
I have a friend who elected to participate in a well and they have yet to bill him and have paid him from first production. He's still waiting on the bill.
Pat, I'm really starting to believe that the oil companies don't know how to run the office side of their business and they just keep going with the mentality that they will just fix it later.
I took a look at your second well and it seems to be doing well with 69,688 bbl as of November and still producing 192 bbl a day.
All I can recommend is that you be persistent until you get answers.
Pat,
I understand that a "typical well" costs between 8 and 10 million to drill...so...take 9 million and divided it by the 1280 spacing unit...and Mr. Kenney is right on...if not a little low: $7031.25 per acre to drill...thus...if holding 8 acres...$56,250 as cost!! Wow...that does add up does it not!! Just thought would push the buttons to see what the figure would be...hope this is helpful!!
Dave
r w kennedy said:
Pat, I don't know how many of you there are participating in the 8 acres, so I don't know how much you paid in total, but the cost of a well per acre can be 4 to 7 thousand dollars per acre. If you paid what they billed you, it's probably their fault for not billing you the correct amount, but that wouldn't stop them from holding your proceeds until your part of the well is paid for, and beyond just for good measure.
I have a friend who elected to participate in a well and they have yet to bill him and have paid him from first production. He's still waiting on the bill.
Pat, I'm really starting to believe that the oil companies don't know how to run the office side of their business and they just keep going with the mentality that they will just fix it later.
I took a look at your second well and it seems to be doing well with 69,688 bbl as of November and still producing 192 bbl a day.
All I can recommend is that you be persistent until you get answers.
Mr. Peterson, that may be the average for wells that are drilled in prime areas with much greater stimulation and using expensive ceramic propants, but wells that are drilled in merely commercial areas are considerably less. One of my wells on a 1280 with aprox 2 mile lateral only cost 5.1 million dollars, or a little under $4,000 per acre. I will bet any amount of money you would like that Pats well is not 38 frack stages with mostly ceramic propant.
RK,
Our well cost 7 million as we got their cost analysis before we decided to become a participant; the well is now tagged due to "deep hole" problems whatever that means, so it has been idle for both November and December. Lord knows when that problem will be fixed. What with all that I now know, the fact we got $520.00 each must be about right, which would be dating back to 02/11 when it began producing. We expected [for some reason; perhaps just wishful thinking] that we would be getting about 2700.00 each. I also believe their office practices leave a lot to be desired; my brother is now talking with a division manager, who does not seem to know what is going on at all. Is a division manager over the chief landman, who told us he got promoted and is no longer handling our files; supposedly handing it over to another landman, who has not contacted us as yet.
This whole issue is extremely confusing; we are all of retirement age, one of us being in poor health. We expected more I guess. Thanks for all your help.
Pat Maloney
r w kennedy said:
Mr. Peterson, that may be the average for wells that are drilled in prime areas with much greater stimulation and using expensive ceramic propants, but wells that are drilled in merely commercial areas are considerably less. One of my wells on a 1280 with aprox 2 mile lateral only cost 5.1 million dollars, or a little under $4,000 per acre. I will bet any amount of money you would like that Pats well is not 38 frack stages with mostly ceramic propant.
Pat, the AFE doesn't necessarily have anything to do with what the well actually costs, they may inflate the cost or there may be cost overruns. Think of it like an estimate to have your roof redone or a car repaired. Only after you see how much they and you, spent for what, will you know the actual cost of the well. One of my AFE was charging for a pump whch has not been installed yet in the last 16 months and may not for a couple of years at this rate. You need to see what was actually spent.
Pat, I just took a little walk through the wellfiles of your first well, it doesn't say how many frack stages, might have been only one, so they didn't bother to number it. I did find out that your well was fracked in large part with literal "beach sand" that does poorly under the pressure that far down and a small amount of silica sand, which is also pretty cheap and probably cost more to haul than the sand itself cost, no expensive ceramic. I would say a minimum to get by well.
Pat, by comparison, your second well had 36 frack stages, 1,193,556 pounds of ceramic propant, 2,810,000 pounds of 20/40, 40/70 white [silica] sand. The cost of your first well is nothing at all like the cost of the second well.
You get a seperate AFE for each well because each well is it's own entity, your cashflow from well one shouldn't have anything to do with well two and vice versa. If they told me the two wells were close to the same in price I would want to see the actual checks they wrote. I wouldn't take their word for it. Pat, I wouldn't worry a great deal yet about your first well, I had one that trickled for a year before they got it up and running.
There is a good chance that the operator is doing something to improve the production of the well. I think I know how you feel; Who would have thought there would be this much hassle AFTER they hit commercially feasable oil?
To be business like, are you able to require an accounting of costs you share in?
The Commission at Bismarck seems to lack an obudsman or advocate for mineral owners.
r w kennedy said:
Pat, the AFE doesn't necessarily have anything to do with what the well actually costs, they may inflate the cost or there may be cost overruns. Think of it like an estimate to have your roof redone or a car repaired. Only after you see how much they and you, spent for what, will you know the actual cost of the well. One of my AFE was charging for a pump whch has not been installed yet in the last 16 months and may not for a couple of years at this rate. You need to see what was actually spent.
Mr. Wagenman, you can audit the operator. For my wells on indian reservation lands I found a law that says I can inspect the books at the wellsite or company offices anytime during business hours. There may be a state law equivalent to this and if not you can audit the operator. As an aside, you are going to have alot of fun in the future searching for all the answers to your questions if you ever want to reveiw them again. You might want to start your own thread so most of it will be all in one spot. Good luck.