We have been trying to nail down our mineral rights on some land in McKenzie County, ND. We have had back and forth emails with the operating company (we are currently receiving mineral royalties on a number of wells). To say this is confusing is an understatement. The main problem is that we inherited the rights and do not have any copies of the leases. Here is what we are being told:
Prior to May 2022, as an example, we had two wells (just a portion of the total wells) that had owner and distribution interests on the first well of 0.00909375 (owner interest and distribution interest were both these numbers) and the second well was 0.00454688 (again, owner and distribution interest were the same number). Both wells had the same general name with a modifier number/label after the name.
Starting in May 2022, the wells were no longer report separately for production/revenue. They were combined to just one well and the new percentage was 0.00085195 (oil only). Our revenue checks went down roughly 29% on average since then. Production attributed to us dropped by 29%. So, I was concerned that whatever adjustments they made to our percentages may not be right. We emailed the operating company.
The first replay indicated that the State of North Dakota required a change in the way operating companies report results: From the reply: “These identifiers are the Tracts you own in. The state of North Dakota made a change to how all companies reflect your interest. Previously “operating company” reflected this on a tract by tract basis.” This was their explanation for why the percentage changed.
A math formula was supplied to show us the conversion. We were provided a Tract Participation Factor (.06245706) and told to multiply this against the old decimal numbers and sum them to get the new decimal. We were told this had nothing to do with net mineral acres. Can anyone explain how TPFs are calculated? Is there a way to use the TPF to determine net mineral acres or gross acres?
Well, I don’t blame you for being confused. This sounds convoluted and I deal with decimals every day. Conoco’s check stubs are not helpful in determining net acreage owned; they may be providing an explanation for that. Basically, they are just pooling all the interests in each unit and paying each owner a proportion of the total production. The drop in production makes sense. What’s your first name? I’ll mail you your lease.
Try the GIS map and go to the Unit Boundaries. If your area gets a turquoise color when you highlight it, you are in a unit. Then ask the company to send ALL the legal papers. As a mineral owner it is your legal right to know it. We got a paper to sign when the spacing unit was transformed to a unit. Sounds like you where left in the dark. We got all the papers they used in the Docket Hearings months before the actual hearing.
The TPF is the percentage of the unit ie 80 acre tract / 1280 acre unit = 0.0625. The second well was a lease line well so on a 2560 acre unit, half the interest. I’m still showing you own a little bit more than they show; I’ll include my breakdown with the lease. Some of the papers you can ask to see which they ought to be able to show you are the lease and the title opinion. Congrats on the new wells.
Thank you. I am not sure how you know where and who to mail the lease to, but i will reply on here when we get it. We are still trying to figure it all out…and, there is quite a bit to figure out…lol.
When you say congrats on the new wells, areou referring to the new wells they are drilling near our wells? There are a number of them (at least 5 and maybe more). If we have been placed into a 1280 acre unit, then my next question is how many of these new wells are also in the same unit. I went to the GIS map tonight and could not figure out the boundaries even though that was an option i clicked on…would be better if i knew acerage and lot numbers (or a map)…will keep trying to research. Thank you all for your help!
After looking up whether our wells are in a unit, it looks like they are based upon the shaded map on the GIS site. The next thing I am trying to find is the definition of the unit our wells/mineral rights are in…i.e. - the boundaries and specific land areas included in the spacing unit). I see from looking at the North Dakota OIl and Gas web page that these can be found under Scout Ticket Data and/or the Well File. This is a premium subscription - either $50 or $175 per year. Is this worth subscribing?
Yes…I think file numbers 37878 through 38881 are included. Also think that 39211 through 39214 could be included. Not sure about wells in Section 31, Township 150 Range 96 and/or Section 6,Township 149 Range 96 areas. When I looked up the depth of some of these wells, somewhere I thought I saw over 17,000 feet deep. The analysis must show the potential for decent reserves if they are drilling multiple holes that deep, but the proof is in the pudding…we’ll see about whether the wells apply to us and/or whether there is any good production levels out of them.
No, prob not worth subscribing for one unit. Attached is the file for 37881, looks like I had my spacings wrong and the Kermit are part of a stand up (N-S orientation) 2560 with sections 5 & 8. The two sections to the west (Boxer/Parrish) are also a stand up 2560. The lease line permits are still confidential status, but maybe they are on a 5120? Larger spacings, but that means you get paid on more wells…you should have some Rinks on your stubs.
We do have Rinks. Thank you for the information. It is a lot to review and may take some time. Most of the wells we have are in 150N 96W 32 and 149N 96W 5…although we do have some smller producing wells in a few other counties. We really appeciate your help. Thank you so much!
We recieved the lease and other information in the mail today. I will lool at it over the next few days. Do you still think it is possible that we may have a higher ownership percentage? In any case, thank you much for your time and help!