I acquired a property through family in 2012 in Weld County, Colorado. The land is in Township 7North, Range 66, West of the 6th PM—section 26. I own 8.5 net mineral acres. Although admitting I am extremely novice when it comes to an understanding of the industry, I trusted that the companies I have leases with would keep me updated with activity, changes, etc. Unfortunately, this has not been the case. I signed a lease with PDC in 2013 and received royalties for several years until the wells were marked as “SI” a couple of years ago, and production stopped. Upon my research, I should receive income from PDC despite the wells being marked as shut in. I have not. On the other hand, I have several producing wells with Bayswater exploration and occasionally receive a tiny check. I am seeking any help and expertise in the field and someone to review my oil and gas lease and help me maximize value. There seems to be recent interest from buyers as I am receiving letters in the mail and have received an offer. The offer seems low if I consider the land value for its acreage. I certainly feel I have a lot to figure out before I could consider an offer. For example, while trying to catch up quickly on activity, I came across something. A few years back, Bayswater decided to pool interests with a neighboring property KTC Farms. Unfortunately, I never received this. From what I have researched, it seems this nonconsent pooling happens frequently. Should I be receiving revenue from this? Can I, if I did not consent? I am hoping someone can help me wrap my head around all of this.
Here is a map that is publically available here: COGCC GISOnline
It would be good to familiarize yourself with what’s going on in the area. They haven’t exactly gone gangbusters in your section like they did in nearby sections, but there is still room for more wells. Attached is the application for the KTC Farms. Unless you are Bell & Associates Land Leasing, it looks like your lease in section 26 is valid and you should be getting paid the same royalty if your tract spaces into the S2S2 of 26. Those wells would show up on your Bays checks along with the SRC Lefflers.
shut in royalties are typically a fraction of the royalty for production so it would take a good long while before seeing a check for that, it would be preferrable if they would get the well producing again to start receiving normal royalties
at this point the lease is held by production (HBP) so there’s not really anything that can be done from a value standpoint. The royalty on the lease will apply as long as there is production. Hopefully they drill some more wells in or into your section.
Here’s some math to consider. These wells are averaging 75K bbls oil and 250 mmcf gas consistently granted they were drilled a decade ago and they’re better now. If we’re optimistic at 70/bbl and 3/mcf each well produces about $6MM in revenue. 1 NMA on a / 640 acre unit leased at * .1875 = .000292969. After taxes, but before discounting for present value, each well is worth about 1500/acre. There is room by looks of the map for 2-4 more wells. They could also drill 20 wells (like they did in 27) through section 25 into 26. It all depends on the spacing of the wells and how that overlaps where you own. You might have 8.5 acres in 26, but only 1-2 acres in the KTCs and 1-2 acres in any future wells; and, the unit size could be larger further diluting your interest. It would be best waiting and seeing what happens as far as permitting future wells as the offers now wouldn’t give much value for them.
