well… this just got harder than i thought it would be…
Exactly!
As if the water wasnt already muddy…
Rick HOWELL! Please, please PLEASE set this straight…
M.BARNES!!! Please reiterate your stance and knowledge in unitization.
I agree with Bob’s comment about the toe section of the hole’s getting a “slight” 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 won’t matter much. From Newfield’s part, it just makes their math easier. They multiply each owner’s 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 well’s 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 “shorted” 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 “current” method is not much different than the “unitization” 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 “re-leased” 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 “covered”, as the Sections 1 & 12 Unitization is “only” 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 “only” 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 1S 4W named the Ashton 1-31. Does it fall in the Velma Sims Sand Unit or the Velma Sims unit?
Unitization v. Pooling. In general, royalty owners are at the back of the pack. NFX or any other E&P company considers us a nusance. I have tried to understand differences between pooling and unitization. What I came to a conclusion was Pooling requires DO’s based on fracking intervals v. Unitization which doesn’t measure distance in each section. Everyone is equal. Ok unless “the other guy” has a fault line half way through their section. i.e. the fault between 01N04W and 02N04W. 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 “short”, 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 ‘forced pooling’.
Note from Martha-this is before drilling can happen. It is the action of finalizing the “leasing” 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 didn’t remember all of the Unitization details on it. While I’m sure it is not the first time, it is the first time I have seen it show up.
Here is COSMO’s take on it.
http://www.naro-us.org/Resources/Documents/COSMO%20Supports%20SB242…
I have been getting offers recently to lease in Sec 14-T1N-T5W. Has anyone seen any activity with the OCC in this section?
Someone at Ecco energy offered me $40,000 an acre for Sec 20, 2-N 4-W. I’m 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 doesn’t look like it goes into the VESS or Velma Sims Unit; looks like it ends on the border or the units.
Like I said 'if they are a legit. company send them our way". Our section doesn’t have 10 wells on it like 17 but it does have 7 and $20,000 an acre is the best we’ve been offered. Weren’t interested in that but $40,000 an acre would take a while to get back and we’re 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.
Didn’t know that Vicki…but guess we would have to pay taxes from royalty we bought from hubby’s brother (that he inherited) right?
That’s right Linda. If you purchased them you have to pay capital gains tax but if you inherited them you don’t