Exactly!
As if the water wasnât already muddyâŚ
Rick HOWELL! Please, please PLEASE set this straightâŚ
M.BARNES!!! Please reiterate your stance and knowledge in unitization.
I agree with Bobâs comment about the toe section of the holeâs getting a âslightâ advantage over the heel section of the holes if the holes come up short compared to a full two section hole under the current rule. If all the wells are mostly the same as the first well, then it wonât matter much. From Newfieldâs part, it just makes their math easier. They multiply each ownerâs royalty using the new formula for every hole (one formula answer for five new wells) instead of having to go back to the OCC after every new hole and paying court costs to re-open the case to get each wellâs percentage finalized as they do now. (different formula for five new wells). They could have easily picked the surface locations the other direction, usually based on topography, entrance roads, best site for pad locations, etc., so sometimes you are a bit ahead and sometimes you might not be.
I do not own any minerals in these two sections, but those of you who do may want to consider your options if you feel your are being âshortedâ depending upon your location and tract and file a protest just to get NFX to explain their reasoning. FYI, if you are a personal mineral owner, you can file a protest as an individual. If you are in a trust or LLC, my understanding is that you have to have an attorney represent you, so that may not be worth the cost if the âcurrentâ method is not much different than the âunitizationâ method.
I think the other really big question to ask is whether the unitization releases the zones above. That would make them available to be âre-leasedâ at another date for different drilling. Might be important for the Springer/Goddard or some other horizon.
Martha - You raise an interesting question as to Formations âcoveredâ, as the Sections 1 & 12 Unitization is âonlyâ referring to the Mississippian, Woodford, and Hunton Common Sources Of Supply.
And I believe that the simple reason why is that the original Section 12 Pooling referred to the Common Sources Of Supply as the Hoxbar, Deese Sand, Morrow Sand, Springer Sand, Mississippian, Woodford, Hunton, and Sylvan, while the original Section 1 Pooling âonlyâ referred to the Mississippian, Woodford, and Hunton Common Sources Of Supply!
So as much as I would love to see them come back in to drill for some Springer Production in Section 1, I believe that the circumstances as they exist would cause them to again Pool the Section 1 Mineral Right Owners for the Springer and/or other previously unpooled higher Formations.
Hello everyone! Hope the day finds you well! I have a question. There is a well in 31 Township 1S Range 4W named the Ashton 1-31. Does it fall in the Velma Sims Sand Unit or the Velma Sims unit?
Unitization vs. Pooling. In general, royalty owners are at the back of the pack. NFX or any other E&P company considers us a nuisance. I have tried to understand differences between pooling and unitization. What I came to a conclusion was Pooling requires DOâs based on fracking intervals vs. Unitization which doesnât measure distance in each section. Everyone is equal. Ok unless âthe other guyâ has a fault line halfway through their section. i.e. the fault between Township 01N Range 04W and Township 02N Range 04W. My comment to Michael is to make NFX prove Unitization is equitable to pooling.
I agree with Bob. Unitization has nothing to do with Pooling as it pertains to this stage in unit development.
Mike - Even if the laterals come up âshortâ, I believe that it is irrelevant under a Unitization of 1280 acres as it is just your number of acres divided by 1280 and it is irrelevant which of the two (2) sections that you are in as opposed to a multi-unit well where length of a lateral in each respective Section is relevant but this is not the case within a Unitization so I do not see how this can be disadvantageous to the Mineral Right Owner?
From Money in the Ground-by John Orban III (available on the NARO website)
Forced Pooling:The situation when a state regulating authority directs the pooling of contiguous leased tracts of acreage. It can be thought of as government-mandated cooperation among the interest owners of a drilling and spacing unit, after a legal court hearing at which all affected parties have the opportunity to present their various perspectives of the situation. A normal course of events in Oklahoma and Arkansas which have statues that specifically provide for âforced poolingâ.
Note from Martha-this is before drilling can happen. It is the action of finalizing the âleasingâ from those parties who have already agreed and those parties that cannot be found or have not agreed to terms in order to keep buisness rolling.
Unitization: Consolidation of separate tracts over a common producing reservoir so that exploitation of the reservoir can be managed as a single entity (in order to promote exploitation efficiency). Every producing state has regulations addressing compulsory unitization, based on the consent of a majority of the affected working interest owner; the percentage ranges from about 60% to 80%. The unitization formula (addressing costs and revenues and the work program, etc.) is based on extensive engineering and geological evaluation of the condition of the reservoirm and the potential [for] the best methods of exploitation.
Note from Martha-this is normally done as a secondary recovery strategy after production is established over a wide area in a particular traditional reservoir by multiple companies as operators. They vote among themselves as to who will be the one operator to provide all the work which is usually waterflood or other secondary or tertiary recovery work.
This use by Newfield is pretty new in concept. A little premature in my opinion with regards to timing. Will be interesting to see how the OCC handles it. See my next comment for my thoughts as a mineral owner.
I had seen it before, it just took me quite a while to find it. And I didnât remember all of the Unitization details on it. While Iâm sure it is not the first time, it is the first time I have seen it show up.
Here is COSMOâs take on it.
http://www.naro-us.org/Resources/Documents/COSMO%20Supports%20SB242%20%20HB1909.pdf
I have been getting offers recently to lease in Section 14-Township 1 North-Range 5 West. Has anyone seen any activity with the OCC in this section?
Someone at Ecco Energy offered me $40,000 an acre for Section 20, Township 2-N, Range 4-W. Iâm not selling, but thought it was interesting. He said he would buy as little as half an acre. I wonder if that is unusual.
Kathlyn - May I ask what RI % (3/16 or 1/5 or 1/4, etc.) was the $40,000 offer for?
K Dawn,
Not sure, but it is operated by Spring Operating Co.
405-340-6811 is the phone number listed on the completion report for the uphole second completion.
The location exception order was 580130 No unit name is listed in the order.
http://imaging.occeweb.com/AP/CaseFiles/OCC4235926.PDF May not be either according to this map in the location cause 101003768
Thank you. It doesnât look like it goes into the VESS or Velma Sims Unit; looks like it ends on the border of the units.
Like I said, âif they are a legit company send them our way.â Our section doesnât have 10 wells on it like 17 but it does have 7 and $20,000 an acre is the best weâve been offered. Werenât interested in that but $40,000 an acre would take a while to get back and weâre not THAT young! lol
Taxes for a couple of acres selling for 40k should net the same as production net income with $50k of production. For the average person. Agree, a person had to do what is best for your situation. And make sure you investigate the entire transaction.
Didnât know that Vicki⌠but guess we would have to pay taxes from royalty we bought from hubbyâs brother (that he inherited) right?
Thatâs right Linda. If you purchased them you have to pay capital gains tax but if you inherited them you donât
How the government spends our money is nothing to laugh about, Linda.
My concern is that the government thinks they own everything. I donât think it will take them a lot longer to decide they own the minerals. Then where will we be?
I live in Arizona. We have national forest and Arizona State land. The state and the feds think it is government land. I say it is public land and should be controlled by and used by the people. The government is taking control of everything in the west.
Were you watching what was happening as the BLM was trying to take the Bundy Ranch in Nevada?