Springer Formation Pooling - Caddo, Washita, Custer County


#1

I’ve been trying to understand my families mineral rights and royalties. I recently went through the documents my family had on the wells in Custer Co, OK, Section 24, 12n, 15w. There are high producing wells on the section but we get about $30 per month royalties on our 26nma. They were drilled and have been producing since the 1980s. I found a Corporate Commission order from 1986 that seems to say that royalties are shared throughout the formation which includes some 40 other sections that are mostly in Caddo County with a few in Washita and Custer.

This is all so new to me and we’re preparing to sell these rights. How does this affect their value? One of the documents has a long list of wells. Should we be getting royalties from wells in the other sections in addition to the few in ours? Do these wells preclude other drilling? Last year the state of Oklahoma leased 80 to Clear Creek Resources for a bonus of $1500 per acre and a 3/16 royalties that said “except the Red Fork and Atoka formations”. Do we get royalties if they drill in that part of the section?

We hadn’t thought these rights were worth much, given the small royalties, but as I’ve done more research it just gets more complicated.

Thanks for any insight.


#2

Don’t sell until you understand what you have.

You will only get royalties on those wells where your minerals are spaced within the well’s spacing allotment. Unless you are in a secondary recovery unit. And then you do get paid on more wells and the entire spacing of the Unit.

Looks like you are probably getting paid on the Bartel 1 well. It appears to be spaced at 640 acres.
Before you sell anything, you need to find out if there is horizontal drilling anywhere close to you. That can open up all sorts of future possibilities. (There were horizontal wells in 32-12N-15W and 1-12N-15W) There is active leasing in that township and range by horizontal operators.


#3

Thanks M_Barnes.
You’re right. I took a look at one of my Mom’s royalty statements and it says Bartel 1-24c and Bartel 1-24t.
I did some analysis on the sections directly adjacent to 24 and 13 (we have rights in 13 too). 32 is just two sections south and three east. Just Section 12 lies between 13 and 1 so it’s pretty close. All of the wells in the sections directly adjoining these were drilled before 2003, so I’m assuming they are not horizontal but I only researched the 12 sections directly adjoining. It sounds like I should expand the area I’m looking at a little.

It does seem like there is a lot of leasing going on in the area but I don’t know enough to know how it might compare to any other area. Since Continental leased our section 13 property I did some searching to see what they were up to and it seems they have been all over township 12n for the last year and a half. In just 2018 they signed 120 leases in Custer County and 65 of those were in t12n. I’m not familiar with any of the other horizontal drillers so I haven’t searched any others.
So, I’m curious. When we have an old but active well now owned by Noble that’s been pumping for 30plus years is it possible they have plans for horizontal drilling there as well? Or would 30 years of pumping diminish what they would expect to find? What sort of documents would give me clue? It looks like Noble sold a bunch of leases on several adjoining sections but not either of these to Blackstone Minerals about a year ago.

I guess I had felt like the section 13 rights were the interesting ones, because we’d received some offers on those and the section 24 ones were less interesting because it was just the old well, slowly pumping away. And yet, I could be totally wrong.

Thanks so much for taking the time to help me think through this. Lots of new things to look at now.


#4

Many of the old vertical wells were in shallower conventional reservoirs. The new horizontal wells are frequently in the deeper source rock shales under the old vertical wells (they sourced the upper reservoirs). No relation to the declining value of the original reservoirs as these are brand new ones. Lots of money is coming into some of these old areas. As my production geologist dad used to say. Easier to find oil (or gas) where they already found oil (or gas).


#5

Thanks, good to know. It makes sense when you explain it. I had seen it as a diminishing pool.


#6

To visualize, think of a tort cake. The earlier zones are the higher layers and the new horizonal zones are the deeper frosting layers.


#7

Cake I can totally visualize.

I think we’ll be rounding up some help with evaluating these shortly.

Thanks for helping me see it.


#8

One curious thing, at least curious to me, on this section is that the state of Oklahoma recently leased out 80 acres of rights to Clear Creek Resources. It’s in a different quarter than ours so I assume it’s not held by the drilling in our quarter even though the well there is pooled among the whole section. The well was drilled in 1982 and from what I’ve been told the rig was moved onto the property on the last day of our lease so it must have been signed in 1979. While we have all sorts of paperwork regarding the well and the mineral deed I’m unable to locate a copy of the lease. I suspect I’ll have to call Custer county to find it in one of the older books.


#9

You can try okcountyrecords.com for Custer County. The digital records may not go back into the 1979. Usually to 1991 or so, but you might find out other info. Free to search.


#10

I love okcountyrecords.com!
When I figured out how to use the stamp amount to determine how much was paid for mineral rights I felt like I’d struck gold. I suspect this document is somewhere in the older books, they’re there but not searchable in the same way. I did find the 1959 Deed from when my grandfather sold the land and kept the minerals. I found that because another document related to the parcel listed the book and page number for it. I bet there is a roundabout way to find this there but I’m too new at this to know it.