I purchased a townhome for my parents 1-1/2 years ago in Brighton; sect 8, 1S, 66W. Apparently the minerals are unleased. I have received a letter from Great Western, who appears to be very active in this area, concerning my unleased minerals. They plan to drill 26 wells on a 1923 acre spacing unit. They have given me the option to participate in the drilling and completion for my proportionate WI, participate and acquire my share of any non-consent interest, or not participate and be subject to a 200% non-consent penalty.
My fractional share is very small, I only own about 1,750 sq ft of surface acres, and I don't know if any minerals under that have been split off, even at 100% of the minerals the fractional share is small. I want to realize the best return possible, but don't want to get into a situation where the time commitment/paperwork is not worth the funds realized.
I am looking for a little clarity on the three offers, I only have a vague knowledge of these three options. My wife has producing interests in TX, and I have both leased and non-leased, non-producing interests in other properties in Weld county, but these options are new to me. Any advice and information would be appreciated.
Honestly, I would sell my minerals. The interest is soooo small that you will only get a check for pennies. Or lease your minerals do not be force pooled. Michelle michelle@quiatcompanies.com
Nonparticipating basically means they are going to carry your costs in drilling the wells but will not give you any payout from the wells until the operator has received 200% of their money back. This is the worst option.
If you are force pooled, it means you will receive no lease bonus but will be entitled to your (very small) portion of the royalties produced from the property.
If you participate, it means that you will need to cut the operator a check for your pro-rata portion of the drilling costs but will then be entitled to receive your share of the gross proceeds produced by the well. This option likely generates the best possible return for you, but it will also require that you put money into the drilling and completion costs (basically writing checks to the operator once in a while).
Ya, that's a thought..............and if the offer was reasonable I'd certainly consider it. I get offers frequently for my other mineral interests and the seem very low (like 1-1.5 years of income on producing minerals).
If you read the law, I believe you will find that if force pooled you would receive a 12.5% royalty until the cost and penalties paid off then you would be a working interest.
COGCC Rule 500 Series - here is a link to Rule 530 through COGCC - take a read for yourself -
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