Greetings from the frozen north. I received a second offer to participate in wells after the first offer expired. I did not want to participate as the operator changed the well space from 40 acres to 640 acres after the well was drilled. I did not sign the lease that allowed them to change the spacing. I can't find any info on this and don't want to spend a bunch of money on legal help as the new spacing makes my interest almost worthless. Seems like the operator is trying to get me voluntarily pooled by participating. My question is: If earlier lessors are spaced at 40 acres is it discriminatory to space me at 640 just because they did not bother to contact me when they leased the property? Thanks, Rod
Rod,
The completion permit spacing is more likely to be a reflection of what the operator found in the drilling and testing process that is best for it to exploit rather than controlling more acreage with the well. I don't have any of the details of the well but you should ask the operator for that information before deciding. The information should include the formations tested, drill logs, formation pressure tests, drill stem tests and Initial potential tests. With that info, you can determine the profitability potential of a working interest investment. If you don't like the odds, lease the well bore rights at the highest royalty rate. Non-consnet penalties in Utah may be unacceptable but check them out.
It sounds to me like you are going to get force pooled if you don't make a decision soon and then your choices may be limited by regulation. As I recall, your controlled acreage is small so protect the anticipated revenue in a way that suits your personal needs.
Thanks for the reply Gary. I can't get over feeling something is rotten here. Is a second chance to participate common? Why didn't Newfield send division orders as requested back in June? How can they drill a well without a pooling hearing as required by law? I asked the operator and they danced.
Participation for .17% is more trouble than it's worth. They are drilling another well and the AFE contains 340 grand for consultants. What is to stop an operator from padding the AFE with bogus bills? The Utah "Board" seems to rubber stamp any Newfield request. Absentee owners are hit with a 300% non-consent penalty as I'm sure will be my penalty.
The "Cause no. 139-90" that changed the well spacing did not retro space my well as it did to two others so possibly I will be spaced at 40 unless I "voluntarily" communitize myself.
Turkish customs agents have nothing over these oil operators for having a license to rob.
Gary L. Hutchinson said:
Rod,
The completion permit spacing is more likely to be a reflection of what the operator found in the drilling and testing process that is best for it to exploit rather than controlling more acreage with the well. I don't have any of the details of the well but you should ask the operator for that information before deciding. The information should include the formations tested, drill logs, formation pressure tests, drill stem tests and Initial potential tests. With that info, you can determine the profitability potential of a working interest investment. If you don't like the odds, lease the well bore rights at the highest royalty rate. Non-consent penalties in Utah may be unacceptable but check them out.
It sounds to me like you are going to get force pooled if you don't make a decision soon and then your choices may be limited by regulation. As I recall, your controlled acreage is small so protect the anticipated revenue in a way that suits your personal needs.
Gary L Hutchinson
Minerals Management