Understanding my lease

Oklahoma Mineral Rights
#1

Would you experts help me understand this situation.

Anadarko drilled on my royalty interest in 1993 in Grady County. The well was sold three times I believe. Sheridan Production ended up with the well and they went bankrupt. FDL Operating bought some or all of Sheridan’s assets, including my old well. FDL told me that the well was shut in when they obtained it. Camino has now drilled a horizontal well on my interest (Section 10) and also Section 4. It seems to me that depending on when the old well was shut in, there could have been a period of time that my lease expired. Is this possible? Thanks for your input.

#2

State your section, township and range and I will look it up. It also depends upon the wording of your original lease.

#3

Section 10 5N5W Grady County

#4

Troini A 1-10 had last production Dec 2019 as far as the OTC records go. NW4 of 10.

Tilgham A 1-10 still online as of May according to the OTC. NE4 of 10.

Black Mesa spud from section 4 on September 5, 2019, so operations began on the well planned for sections 3 and 10 before the other well stopped production. You are held by the previous lease if you had Troini production from the NW4 since it was still producing when the horizontal well spud. I am assuming this is the old well you are referencing.

#5

Thank you Martha. Yes that is the old well for Section 10. That is very convenient, since the people holding the lease get to decide when to stop production and shut down the well. I hadn’t been paid royalty for about five months before the payment in December. They could have very well shut it down months before and who knows when that oil I was paid for in December was actually pumped. FDL told me that the well could very well be producing again sometime in the future. I see why the oil companies don’t share much information with the royalty owners.

#7

Graceful: There is a difference between oil produced and oil sold. Natural Gas is sold into the pipeline when it is produced because there is no where to store natural gas. The oil when produced goes into the tank battery. When the amount is sufficient, the pumper calls into the purchaser to come pick up a load of oil. It is at this time that the oil is sold. Very, very few of the vertical wells produce enough oil in a month, let alone a day, to fill the storage tanks so as to sell a load of oil. The newer horizontal wells will, but after initial production, the amount of oil produced drops drastically and a load of oil may not be sold for several days or even weeks. This is why the production date is not important. The date the oil is sold is important.

#8

So, in my case the oil was held in the tank until there was enough to be sold and that would be in December 2019 for the the Troini well. I was never informed that it had been shut in. The well had hardly been producing anything for some time. I think last year I got about $900 dollars in royalty payments. When I got the payment in December it was the first one I has received in about five months. I actually contacted Sheridan several times and asked how much oil was considered worth pumping. I wanted to free up my lease. At that time there was no intention to shut it down. Then suddenly, after another company decides to drill on that section, it is shut down. Sounds a little like cohesion.

#9

As the topic headline says, you might want to read & understand your lease. There are many threads on this forum to help you with every paragraph that you might not understand.