Wells, confidential status, royalty payments?

Briefly, this has been the progression of wells on the property we have mineral rights to. Well number one took 11 months to pay from the time it entered confidential status. The extra time after the 150 days was due to "title" issues. Since then there have been only a couple of other payments from that well and production has been very low, probably due to well number 2 which came off confidential status 3/15/2014. There has been no payment on that well nor any word about what is going on. Wells 3 and 4 have now entered confidential status. One of my cousins visited the site a couple of months ago and at that time the first two wells were pumping, they were flaring off the natural gas from well 3, and there was also a pipe in the ground for well four. She was told they would be burning off the natural gas from well 4 in a day or so. I do not know well drilling works so am not sure where they are in the process. I know that with the first 2 wells they did not go on confidential status until they were operating. I don't understand the delay in payment. Supposedly the "title" issues were what held up the first payment an extra 5 months after the 150 days were up. So theoretically that should be settled? Wouldn't whatever information they don't want public be pretty much the same for additional wells on the same pad? Why the delay each time? I guess I was just wondering how long this process goes on before they actually pay anyone regularly.

Gail, when I look at your section on the map, I only see 2 wells and wellbores, no permits or confidential wells. It could be a mistake on the map, but nothing but those two wells come up in a search for wells in that section also. If Petro Hunt had even a permit to drill another well in 159-94 section 4, it should show up. You might call the NDIC and ask them.

Your first well had a pump installed last september, normally a good thing but it didn't produce in October, 1,788 barrels in November, 617 barrles in December, 125 barrels in January, 748 barrels oil in February. It's possible that your royalty did not reach the minimum before a check is sent.

I would check on those other wells because they sure aren't showing up where they should.

You might want to call the ND industrial commission. My understanding is that is not okay and I would want someone to check into it. It isn't unusual for them to burn off gas for the first year if there is no pipeline near or if the pipeline is full. Don't get me started on that. However, I would want to know specifically what the title issues are and then I would consider having a meeting with an attorney to determine my options. I have had several wells and NEVER have we gone past 60 days even when the well was brand new.

Lynne, you have said elsewhere that your family was the sole owner of the minerals, that makes title alot easier.

The operator can get permission to flare gas forever if they claim that installing a gathering line is un-economic. Since ND wells don't usually produce alot of gas after the first year and the gas value is calculated as dry gas, stripped of valuable liquids, the operator can virtually always make a case for a gathering line being uneconomic. If they couldn't make a case for the gathering line being un-economic, it would be so profitable that they would have put it in already.

Petro Hunt is a little different than most operators.

Lynne Smith said:

You might want to call the ND industrial commission. My understanding is that is not okay and I would want someone to check into it. It isn't unusual for them to burn off gas for the first year if there is no pipeline near or if the pipeline is full. Don't get me started on that. However, I would want to know specifically what the title issues are and then I would consider having a meeting with an attorney to determine my options. I have had several wells and NEVER have we gone past 60 days even when the well was brand new.

Hi RW, I have records in MN and AZ so doing the best I can with what's here in AZ. Well number 1 started producing in August of 2012, with production for Aug-Sept at 6196 barrels, and we received our first payment last fall (2013). The permit for well 2 was applied for in 2012 also and it came off the confidential list March 15 2014. The production for well 1 decreased dramatically around November 2013. I am pretty sure the pump installed in Sept. 2013 is well 2 and I have no idea what production has been since we have not received any info yet on that. The permits for wells 3 and 4 were applied for together and appeared in the daily reports some time ago. They are recently listed on the NDIC Confidential list. #'s 27256 and 27257 Carlson 159-94-9D-4-(3H and 4-H). On both wells 1 and 2 it looked like Petro-Hunt did not put them on confidential until they were producing, but that's speculating on my part based on looking back at first production. I will admit there is a lag in the paperwork as it goes to MN and then is forwarded to AZ. I just check my bank account to see if there is any payment. This month there was a small deposit for well 1 and that's it so far.

Lynne, there are many people involved on our section, several in our family alone. However, all title issues should have been settled prior to payment for well 1. I had seen the comment made by others on here that after the first well, payment came before the 150 days were up. That was why I was wondering why it still had not come. It does appear that production has been scaled way back for some reason so it may be they have yet to hit over $100 and that is why nothing happened. I'm wondering why they would continue to put wells on that pad if production is so low???? Not that I'm not of a trusting nature.

Never the less, thank you both for the information. I realize I am getting just a little impatient. :) So how is Petro Hunt different? Also, I saw somewhere on here once that there is a satellite that shows current pictures of ND sections. Does anyone know how that works??

Gail, a well on the confidetial list has probably not been drilled if it does not have a date on which it comes off the confidential list. All permits are "confidential wells" drilled or not. I think it very likely that if there is no signs of the permits on the GIS map or in a search for wells in your spacing, the permits are probably as fresh as wet paint.

Gail, it was the first well that got the pump, it was specifically on that wells page with the date. and corresponds with the lack of production.

Your second well has produced 4,247 barrels in January and 5,320 barrels in February and the status is free flowing.

I have heard of operators being sneaky enough to not ask for confidential status until the well was about to produce. Even though they would have owed reports to the NDIC from the beginning, because the confidential status did not truly begin until the operator requests it, the state would let them slide. That is not to say that if there are 2 more producing wells there, that you can't find some production information from them in the general statistics because sales of oil are public knowledge and can't be held confidential. Gail, look in general statistics in about 2 months on the NDIC site, they run about that far behind in getting sales reported and published.

rw, thank you for the stats on the second well, sounds like it is doing well. Is it possible the pump on the first well had to be replaced? Or does that mean that it was free flowing until then? Would that mean production will continue to be low on well one? I have no idea how this all works. I do have receipts on well one going back that we got last fall that covered the several previous months. Also I started checking the monthly reports as soon as it came off confidential so I do follow them even though they are a month and a half behind. I will start checking for all the wells. I was under the impression that no production reports were made public until confidential status was over. Thanks for clearing that up! I'm sure no operator would ever be sneaky if it meant they could earn interest on more money for a longer time. LOL

Gail, they aren't production reports, they are sales reports, but you can't have sales wothout production.

As I said above, usually getting a pump is a good thing, it should if not temporarily increase production, it should at least slow the decline of the production.

September was the month they started installing the pump on well one, the well produced nothing in the month of October and produced 1788 barrels in November, fairly close to where I would have thought it to be without the pump. Dec 617 barrels, Jan 125 barrels and Feb 748 barrels, were less than half normal production in my opinion. I believe there is something going on there but what it is is hard to tell, the well produced fine for a month after the pump was installed.

It was also producing fine before that. It's a mystery to me, but then a lot of things are. I wonder if it is somehow related to the other "construction" on that site.?? Thanks rw!

r w kennedy said:

Gail, they aren't production reports, they are sales reports, but you can't have sales wothout production.

As I said above, usually getting a pump is a good thing, it should if not temporarily increase production, it should at least slow the decline of the production.

September was the month they started installing the pump on well one, the well produced nothing in the month of October and produced 1788 barrels in November, fairly close to where I would have thought it to be without the pump. Dec 617 barrels, Jan 125 barrels and Feb 748 barrels, were less than half normal production in my opinion. I believe there is something going on there but what it is is hard to tell, the well produced fine for a month after the pump was installed.