What comes next?


#1

My family and I own surface and mineral rights in the Hollywood Unit, Block 5, Section 14. There are five wells in our unit and fracking began in June. To date we are told that spreadsheets are being reviewed and division orders will be coming in the next month. A neighbor reached me today o tell me that their were five red top gas valves on the property but no tanks for oil at all. That is a little concerning to us, but perhaps we don’t need to be. Also, once division orders are signed and returned, do we need to wait for all mineral rights owners to do so too before anyone gets a check? I’m just so ignorant at this point and will appreciate any comments


#2

Hi Kathleen, if there are no tanks present, there may not be any oil production. However, there could be a central tank battery on someone else’s land if it is a pooled unit. You want to make sure your neighbor knows to check beyond the location of just your minerals. Also, due to the backlog in installing pipelines, there may not be a way for gas to get to market. So the operator may just flare the gas. Most leases don’t provide a royalty for this, unfortunately. In response to your last question, an operator’s obligation to pay one mineral owner is generally not contingent on getting other mineral owners to act.


#3

Thanks for your reply. I’m just confused since in March I had an email that said all five wells would be completed simultaneously. Then in May I was told that fracking would commence in Early June and division orders would be coming in August. Then in August I was told that they would be sent on one well in a month! I’m wondering if this Midlands Differential is in play in the Hollywood Unit. If so, just wish someone would say so. Would certainly be easier than second guessing what’s going on. My mom provided a ROW years back. I need to pull that document and see what it was for.


#4

Happy to help. May I ask, what is the Midands Differential?..Are you referring to the current discount to West Texas Intermediate for most Permian oil sales?

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