When do your interest pay and when they do not?

I have a two part question horizonal drilling, we have mineral interest in sec 28 where there’s a top hole and the bottom hole is in sec 21, both are 6N, 6W and the second is we also have interest in sec 32, 6N, 6W which it seems is a bottom hole, and the top hole in sec 8, 5N, 6W. How can we tell if we should be getting anything from these. We wern’t sure if it had to do where your mineral interest laid in the section or not.

You will only get paid if the perforations are in your section. You will get paid on the following formula:

net mineral acres/actual spacing acres x royalty x % perforations in your section.

Does the “actual spacing acres” equal the “net mineral acres” if all of the owner’s net mineral acres are in the spacing area? In other words, if the well is a straight bore (which requires 160 acres in OK?) and if you own 80 surface acres of that 160 acres, and if you also own all of the mineral rights of that same 80 surface acres, will you get a royalty on 80 acres? /// if you agree for a lease of $500/acre prior to drilling, will you get paid $40,000 prior to drilling and then also get paid a royalty on all of your 80 acres if the well produces?

It would be highly unlikely (but possible) that anyone at this generation still retains a full 80 acres as most families have quite a bit of fractionation as each generation passed on to multiple people.

A straight well bore may have different spacings as the spacings relate to fluid, depth and pressure. A general idea is 80 acres for an oil well and 160 to 320 to 640 acres for gas.

If you did actually have 80 acres and the spacing was 80 acres, then yes, the net acres would be equal to the spacing acres. Many of us would take the highest royalty choice and the lowest bonus choice if drilling was pending in a good area. The royalty would pay off better in the long run. But you don’t always know. I usually lease for a 1/8th if I have other choices. If a well is drilled within the primary term of the lease, then you would get royalties on the well according to the terms of your lease. Be aware that on a lease, the gross acre parcel is usually described, not the net acres.

Also, it you have acreage in the northern tier (sec 1-6) and western tier (sec 6, 7,18, 19, 30 and 31) of a township the township is probably not going to be a 640 ac section. Adjustments are made for the curvature of the earth. So those sections may have a spacing of 640 acres, but the “actual spacing acres” might be larger or smaller for royalty purposes.

Thanks. That is what I suspected. I’m looking at a “Pooling Bonus Calculations” from an operator on a straight-bore well that has a 160 acre spacing. All of the minerals were pooled. If you add up all of the acres owned by mineral owners, there is only about 95 acres listed. For example, owners that had ten acres of surface in the spacing and also owned all 10 acres of the minerals, their lease bonus was only on 3 to 5 acres. Why were they not paid for all 10 acres?

Novice- you will probably have to know what elections were made by the different owners, ie $200/ac & 1/8th royalty; $100/ac & 3/16ths; or no cash & 1/4th. If I own 10 acres that are being pooled, I can make different elections for each acre or portion of each acre, IF there are different options under the pooling Order.

Also, some of the mineral acres you were looking up in the pooling order may have already been leased, so they were not included in the order.

Todd: Very interesting. When would one want to do this? I suppose it is a bit like hedging ones bet.

Thanks. I did talk to one of the mineral owners who said he had never leased before. He was the one who got paid for 4 of his 10 acres in the spacing. He has no idea why he didn’t get paid for the other 6 acres. As for the other owners, it appears that they were all force-pooled likewise for 1/8, and they likewise just signed on the dotted line, probably like the neighbor I talked to. There is nothing for more than 1/8. So my revised question is this: If there are 160 acres in the spacing allotment, and assuming all of the mineral owners are leasing for the first time, should not the sum of all of their surface acres that are within that spacing equal 160? (Assuming for the sake of discussion that no mineral rights have ever been severed from the surface rights.) In other words, should not the sum of acres being leased equal the number of acres covered by a lease bonus, and since this is a straight bore well in Oklahoma, should not that sum-total equal 160? (give or take a few acres if for a correction section).

If you state the section, township and range, you may get a better answer. (And many of the minerals have been severed from the surface due to generations, droughts, sheriff’s sales, etc.). If this was a recent pooling in Grady, 1/8th is usually only one of the options offered. (unless this was very shallow)

I don’t want to get anybody in trouble until I know better in which direction I should go with this. Sorry.

Poolings do not always include everyone who has mineral acreage. Some folks may have leased already, so they would not be included in the pooling. Also in a pooling, an owner may have lands that go outside the pooling spacing, so they may pool less than their total holdings. You might also look in www.okcountyrecords.com to see if leases are also posted for the section you are looking at. Hard to give you a better answer without the S-T-R so we can look up the leasing and the pooling order.

Sounds to me the Operator couldnt find the owners of 65 areas. So, the State will get that part of the pool??? In the Pooling order did he list names/owners with unknown addresses?

The state does not “take” the acreage-it still belongs to the mineral owner. To keep business going, the pooling process allows for the non-located folks to be represented. The options for the pooling are given to all non-leased parties sent to their last known address. They have 20 days in which to respond. If they do not respond, the non-respondents are assigned the lowest royalty and highest bonus. Those funds are reserved for them in an account at the operator’s. After a certain amount of time, the funds are turned over to the state where they are still held for the mineral owner or their heirs. The Oklahoma Corporation Commission has a booklet which explains all the rules which reflect the oil and gas statutes of the state.