What would you do in this situation?

Oil and Gas Leasing Help
#1

I have been dealing with this thought for along time and finally found this forum and hope I can get some advice when dealing with a existing lease. I live on 10 acers of land that I bought in 2000 from a farmer who was liquidating his 30 acres and was dividing it up into 3 parcels. I was of the first buyer to purchase the land off him and I requested if the mineral rights come with it. He said yes.

When we close on the property I started getting checks in the mail about every 3 months. Nothing much to brag about, even though when I acquire about the property it was never the intent to acquire the rights, I just wanted my own piece of heaven, and if I was entitle to the rights I believe I should have them. Throughout the years I have talked with the land owners who purchase the other 2 parcels and I found out that they are not receiving any mineral rights what so ever. I now assumed I ended up receiving all of the mineral rights to all 30 acres.

Fast forward 12 years later...... Since then I have built my house,and only recently to find out that Chesapeake Energy is now drilling a well about 5000' from my house and the other 20 acres of land I'm collecting the mineral rights off of. They have come to my house to test the water. I didn't understand to much about the process of them drilling the well until I asked only to find out that they are drilling 8 wells on a single pad and traveling 12500' horizonal and then 5000 to 5500' vertically ( they called this a super well). Because the property I'm on is very narrow I believe I could end up with 2 verticle wells under my property.

I'm currently collecting my royalty checks from EnerVest and they are paying me for oil they are receiving from the Clinton Formation which is approximately 4600' down. I understand my lease is with EnerVest, However because this well being drilled is 7900' deeper and the vericle head will end up underneath my house am I entitled to any compensation? Even though the well is not on my Property and my lease is with EnerVest.

Also should Chesapeake be contacting me? If they don't should I contact them or EnerVest?

I feel very lost on the direction I should go.......I hope someone can shed some light on this.

The location of my property is 10 miles south east of Canton, Ohio. County of Stark. Pike Township

#2

Also I thought of another thing. If my lease is with Enervest, would that lease only be for the 4600' to the Clinton Formation? And anything below that would have to be another lease?

#3

Mr. Kenny, your first step will be to get a copy of your recorded lease, until you have read that everything is speculation.

#4

Mr. Kennedy, Thank you for your advice. It just so happen I have the copy of the lease that was dated May 9th 1965 between M.B. Belden and the Joining property owners of the area. It seems that they pooled together back in the 60s to accumulate 160 arces. After reading the first paragraph of the lease agreement, it answered my first post. It gave them the right to removed from any sands, strata or formations underlying the premises. I wish I would of read this before I posted. Now I am learning. I also have the map that they have agreed on the 160 Acres and I see that about 120 of this acres falls in the area of the vericle well. As far as royalty is concerned, it says percentage of royalty 25.0125 and Decimal Interest is .031265. For what ever that means. But I must say this does take out all the speculation. Thanks for the advice.

#5

Jim, The decimal interest is your percentage of the total acreage of the drilling unit times your royalty of 25%. Based on 160 total acres you would have to have 20 acres of mineral interest to make it come out to .03265. If its based on 120 acres you would have to have 15 acres to make it come out to .03265. I'm a little confused on what kind of well you are talking about. Usually the verticle is drilled first and then the horizonal, resulting in a horizonal well. If you own minerals in any part of the drilling unit you should get royaltys regardless of the exact location of the bottom hole.

#6

Thank you for your explanation on the Decimals, I did not have a clue. And since you said that, I looked more into the lease agreement and talked with EnerVest Land man today and he said that I was collecting off of 20 Acres. Even though I only own 10 acres. The previous owners royaltys shifted to me when we transfer the property at closing. Sorry had things messed up when explaining Verticle verus Horizonal. I'm new at this.

The land man also told me today that when they start drilling the well (Next Month) they will start drilling @ 33 Degrees North East and will have their Horizonal well heads at 5000' from the pad....... Because of the layout of my property he says chances are very good that I'll end up with 2 of those heads under my property and possibly a 3rd toward the tail end of my property. Chesapeake is doing all the work and EnerVest is partnering up with them because they have the lease with me.

#7

And also if what you say about owning the royalty to the Units then we will definitly collect from all 4 wells heading N.W. at 33 degrees because the 160 Acres covers the whole N.W.

This is unbelieveable! Thanks so much for your clarity

#8

Good luck Jim. Don't take everything I said as the Gospel since all I know about is Oklahoma. You made a smart move asking for the mineral rights. When I bought my property in Texas the mineral rights were long gone!

#9