Chaparral Energy is acquiring leases from Sunoco Partners for pumping oil in the above unit which is described by them as parts of 13 sections in 3N 2W and parts of 12 sections in 3N 3W Garvin County. I have interests in 5 wells with modest production in sections 10 and 15 3N 3W. Oneok produces the Gas. Both Sunoco and Oneok had division orders of one per well with a fraction for each. Now Chaparral wants only one new DO with a fractional interest that I cannot duplicate or decipher, and the order references a property description which may include dozens of wells. The cover letter says there is no change to the total interest, but I know that since I haven’t signed any deeds. They are obviously making a completely different computation. I haven’t called them yet, but is there anyone else out there involved in this?
Is the Division Order is for the entire SW Antioch Gibson Sand Unit? If so, then the decimal will match the unit ownership which was set up under the unit agreement. That is the common practice. Might be a good idea to call them and find out just exactly what reservoirs they are trying to cover with the DO.
If you have wells in sections that are in other reservoirs, then they may have their own division order decimals.
If you have horizontal wells that are in deeper horizons, then you need to find out whether that horizon is covered by the terms of the unitization agreement or not. Sometimes, certain sections can have multiple waterflloods with multiple units with different decimals. Get clarity before signing anything.
The SW Antioch Gibson Sand Unit is a secondary recovery unit pertaining to the Gibson common source of supply. You might want to have an attorney look at the OCC Orders creating that unit and get an opinion on the propriety of having one DO for all of your interest in the entire Unit. Sounds like a bad idea to me because the entire unit production is allocated to the individual tracts on the basis of the Tract Participation percentages.
Thank you for the suggestion to ask about reservoirs covered. Does it seem unusual to have 6 legal pages of Lost Owners attached to a Division Order? Strangest DO we’ve ever received…
Its not common, but I think its a good practice. The company is making an effort to locate people that don’t seem to have current addresses on file with the County Clerk. The alternative is to suspend the funds and have them go to unclaimed property, which is not in anybody’s best interest.
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