Salt Water Royalties Questions West Texas

Surface Owner Issues
#1

Hello,

I am a new landowner due to the passing of land to my family and I have received two offers for a Salt Water Disposal site. As a newbie I am seeking advice from any source I can find. The first offer was for 20k outright purchase which I rejected quickly.

They have countered with 12k Option to lease and 2% royalty. I think in Stanton County Texas these are going for .50bbl. My research has shown anywhere from .05 cents bbl to .08 cents bbl plus damages etc.

Any Insight would be a great help. Thank you

Kevin Meek

#2

Kevin:

I"m not sure about the money end of your question as this varies from area to area. I will advise you to be very detailed in your agreement in regards to damages to surfaces areas due to activities related to this SWD well. Any spill, regardless of size will impact your property for possibly years to come if the incident is not properly cleaned and areas remediated. Also, if you have any stock ponds or other waterways on your property, these should especially addressed. Always report any spill or pollution related incident to the Railroad Commission of Texas and a field inspector will inspect the area and file a detailed report along with photos. This is always helpful in the event legal action has to be taken against the operator. I have seen situations where the current operator was great to work with and strived to comply with all rules and regulations but eventually the operation was bought out by a not so good operator and this is where the problems begin. Good luck and always make routine inspections around the area in the event the operators pumpers tend to look over possible problems.

#3

Not enough information and probably not nearly enough money. Do you have an old depleted well on your property that they want to pump the water down ? Or do they have to drill the well ?

#4

We have a second offer for 5% of Gross, 1% of Skim Oil. They will be drilling a new well and have a manned operation 24/7/365. It will be a commercial swd operation pumping 10,000 to 15,000 bbl per day.

#5

Kevin:

If this will be a commercial disposal well, you have to keep in mind that there will most likely be heavy truck traffic 24 hours day. Make sure you have a RRC inspector conduct a routine inspection of the facility to make certain that they are in compliance with the Statewide Rules regarding commercial disposal. For instance, the operator is required is have a monitered access to the property, some have 24 hour personel on location. Also, they are to have overflow alarms on location in the event of a tank overflow. Definately, the access to the property needs to be regulated either by a locked gate or individual supervision. Again, the monetary end is your decision but I would check around and compare rates to other similar operations in the area.

Kevin Meek said:

We have a second offer for 5% of Gross, 1% of Skim Oil. They will be drilling a new well and have a manned operation 24/7/365. It will be a commercial swd operation pumping 10,000 to 15,000 bbl per day.

#6