Dear Owner,
I received the following message from Mack Energy. I redacted some info since I have no idea whether or not is could be harmful to leave in:
Upon geologic review, we see no remaining up hole potential in the Tommy No.1 well. The well is currently producing in the XXXXX (“Unit”) and will need to be P&A’d after the Unit reaches the end of its economic viability. Therefore, Mack requests an assignment of your interest in the wellbore in lieu of any future plugging liability.
Please mail your executed wellbore assignment in the enclosed envelope. If you have any questions regarding this Wellbore Assignment, please feel free to contact me at XXXXXX
I sent the following query to Mac Energy:
*I and my brothers received letters from Mack Energy talking about talking about the xxxxxx, Oklahoma. These letters are asking us to send in a wellbore assignment to Mack Energy. I have no idea what this really means. Does it mean we are signing over mineral rights to Mack and walking away from the property entirely? Or, as I suspect, something else? If we do this, what do we get in return? What is the up side for us, and what is the downside, or even possible downside? There was a mention of $10 consideration but that doesn’t even cover the notary fee.
Any light you can shed on the subject would be quite helpful.*
I got the following reply:
*The xxxxx No.1 wellbore was brought into the xxxxx (“Unit”). Mack has begun the process of flooding the Unit for secondary recovery with nitrogen and the xxxxx well is not showing any potential, at least at this time, as being a producer. It is highly probable we just need to plug this well. In lieu of plugging the well at this time we sent out wellbore assignments to see if any owners would want to relinquish their wellbore rights in lieu of their plugging liability. This assignment only applies to the wellbore of the xxxxx well. It does not transfer any leasehold or mineral interests of any kind and will not affect any reversionary interest to the Unit. The $10 consideration and other good and valuable consideration is just standard legal language utilized in the agreements. There is not $10.00 exchanged, the consideration here is the cost of the plugging liability.
There is no obligation for you to do the wellbore assignment. I suspected it was highly improbable to get this done, but am going through the process before we plug the well. If not accomplished, I will be sending out another letter for owners to take over the well or it will be plugged.
Please feel free to give me a call if further explanation is needed.*
The only thing that is not clear is if I do nothing, could I be on the hook for anything later? And I have to ask the questions, “Why do they want me to do this? What is in it for them? What plugging liability mentioned above are they talking about?”
Any thoughts would be much appreciated.