WIU in Lea County - what are our options?

In a nutshell: A few months ago we were contacted by three different outfits with offers to purchase some working interests in Lea County. We passed on the offers. Now we’ve received paperwork from Mewbourne proposing to form a Working Interest Unit. I’m not sure what our options are or how to go about making these decisions.

Context: my spouse is ill and, rather suddenly, unable to make these decisions. He’s been in the industry and making all these decisions regarding our O&G interests forever and now it’s on me and our son. My spouse did not want to sell. His thinking is not clear but I went along with it. Now we’ve got this paperwork to sign and he doesn’t want to participate. To my thinking, if you don’t want to participate in a WIU then don’t own working interest? But what do I know. What happens if we don’t sign? Should we sign? Should we have sold (I had said we might sell but only on the condition of retaining ORR)?

Anyone willing to help me understand what’s going on here, what my options are, who I should talk to… any advice or help would be greatly appreciated.

I’m so confused but I’ve been asking about mineral right my grandfather left to me. It’s Lea county/Hobbs. Don’t know anything about none of it. Wish I could find answers also

Does your husband have co-workers or friends with specialized knowledge? It sounds very, very risky to sign a document with consequences you do not understand. Is there a reason you have not contacted a NM oil and gas attorney? Forum member NMOilBoy will hopefully see this thread and respond.

Sadly, no. He’s in his late 80’s and, well… you know.

He took over the business from his dad and it was one of the few very small O&G companies to survive the early 80’s. He bought up the shareholders, shut down the business, and then sold off most of the working interest leases when he retired.

I have not contacted a lawyer. This is all new to me. And, on top of everything else I’m dealing with, very overwhelming.

Any recommendations are welcome.

In my opinion, you must at the very least seek legal counsel, and I suppose that person should be well versed in New Mexico oil and gas law. If you have an attorney where you live, perhaps he could refer you to someone. Wade Caldwell is an attorney in San Antonio whose contact information is on the Mineral Services page of this forum: I am certain he could offer guidance, but traveling to NM might be complicating factor. I am sorry you are having such a stressful time.

Sorry to the OP here.

Rambling thoughts

I’m not 100% sure what “proposing a Working Interest Unit” means. So I’m not totally sure what signing or not signing gets you. I’m assuming that Mewbourne is possibly going to drill some horizontal wells and is pooling the interests. Which, yeah, if you want to be a non-operating WI owner you probably want somebody to drill wells. IF this is a pooling and you don’t participate, the rules in NM are not your friend, in most cases your acreage is worth a lot less if you are force pooled. If you don’t want to deal with all of this long term or you don’t want to participate in (i.e. pay for) wells, you probably want to sell whatever you have for the best possible price as its worth more to somebody else than it is to you. But I might not understand what they are proposing.

Things that seem important w.r.t. advice, regardless of what Mewbourne is proposing:

  1. would wells drilled here be crap or great or whatever?
  2. Is this significant? If you own 100 acres and Mewbourne wants to drill 4 wells and you are looking at a possible $3-4m of AFEs, then you definitely want some expert advice. Attorney, landman, engineer, etc. If you own an acre, well then maybe don’t sweat it.

You, or somebody, will want to participate in great wells under a decent operator. IMO. So would be helpful to know where this is located for starters. Mewbourne is considered by many folks to be the best operator to own a working interest under. Their wells are reasonably cheap, they are running a ton of rigs, and they get stuff done quickly. For whatever that is worth.

If you don’t want to air all of your info here in a public space, my default advice would be to call Tracy Lenz (engineer) or Wade Caldwell (attorney) from the directory and ask them to look at whatever you got from Mewbourne.