Replies to This Discussion

Permalink Reply by flex auger on July 31, 2012 at 7:55

Shirley, you did fine with your non-consent choice. You will get a royalty payment every month just like everyone else, plus you have an added benefit that someday if the well pays for itself 3 times you could likely "own" part of the well and make more money possibly. You will get extra paperwork in your royalty payments that show some expenses and such and kinda gives you an idea how its "paying" for itself. If the well "playsout" before you get to the ownership, then of course it doesnt really matter, the well wont be paying anyone. Sounds like you did good.

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Permalink Reply by Spring Branch,mineral owner on July 31, 2012 at 11:47

Is anyone paying attention?  Shirley is not a mineral owner in the well.  She non-consented a Working Interest in he well!

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Permalink Reply by Oklahomachic on July 31, 2012 at 11:50

Please explain in detail what you're saying thanks

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Permalink Reply by Dion Warr, CPL on August 1, 2012 at 5:01

Shirley:

If you're a non-consenting WI owner (ie, you own leasehold interest but did not elect to participate in the well and pay your share of well costs up front) you will not be able to receive any proceeds from production until both the actual well costs and the risk penalty are satisfied. The only exception to this would be if you owned royalty interest in the same lease, at which point you would be able to recover a reasonable royalty amount under the order, which would generally be paid by petitioner / operator. Most of the time, AOGC simply transfers your rights and interests to the applicant until the above costs have been satisfied.

If you were a nonconsenting mineral interest owner, you would receive the 1/8, or whatever the AOGC determined as "reasonable" (but in no event less than 1/8).

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Permalink Reply by adubu on August 1, 2012 at 5:44

Dion--- tell me if following is correct and Shirley may understand--- I assume she did not lease and became a small WI owner in the first well and now they want to drill an alternate well in the unit and ask if she consented and if so she would have to pay at time expensive as they occurred but if when production started she would be credited her share of production against expensive and pay only remaining balance until well paid out then she would receive all net money for her % WI owner of the well. If she didnot desire to pay money out for cost of well ( which is some risk not to mention liability issues) then she basically NON CONSENTED so rather than payout first before income nonconsent has to pay 300% of total well cost back to operator since he had to pay her share and take risk before she would then back in as WI. In that case long time before she see any income from well if ever.  Is this correct Dion or am I off track? Thanks for reply--- If this is correct Shirley may understand better if this is wrong I an sorry to muddy the water.

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Permalink Reply by Oklahomachic on August 1, 2012 at 7:01

Should I or still receive royalty rev? FYI I went non-consent on a few because I am getting x amount of money that I am able to stay home and finish on-line school ironically as a "Landman" If I had signed then I would be out of substantial $$ for a while without no cash flow... I certainly am not going to go this route again.. They are opening 38 wells..

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Permalink Reply by Oklahomachic on August 1, 2012 at 7:11

I do however only have one WI the rest of the OGM roghts are strictly royalty income only.. I own in 27 Counties and Parishes.. But the WI seems to be a lot more to look over... Just now learning JIBs and finding mistakes. I worry because if I never looked then I would never known..

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Permalink Reply by Spring Branch,mineral owner on August 1, 2012 at 9:57

Shirley, have you considered asking Bonanza Creek to make you an offer for your Working interest in the Field.  You are certainly under no obligation to accept their offer if you don't like it.  As I remember, Bonanza Creek has a 50-60% WI in the various wells.  You might also consider sending the same request for an offer to the 2 or 3 other larger WI owners in the field.  If it looks like you might do a deal, for gosh sakes get an oil & gas attorney to help you.

Permalink Reply by Andrew on August 1, 2012 at 8:54

I took Shirley's post to mean that her father had working interest rights via lease or assignment which she inherited.

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Permalink Reply by Spring Branch,mineral owner on August 1, 2012 at 9:04

Dion, if my memory serves me, Shirley's grandfather was a landman employee with Crystal Oil of Shreveport.  Shirley's father was also a contract landman with Crystal Oil.  I believe in the case Shirley is referring to, she inherited a small WI  from her father that he owned as a result of his father's employment with Crystal Oil.  For that reason, the interest she is referring to is a WI, not a royalty interest, though she obviously inherited royalty interests from her father in other geographic areas.  I also bought a small WI from a former Crystal employee many years ago in the same Units of the Dorcheat-Macedonia Field, where Bonanza Creek Energy is doing considerable infield drilling.  You gave her the correct information about actual costs plus risk penalty.

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Permalink Reply by Andrew on August 1, 2012 at 9:16

There is still the issue of the royalty owners getting paid, which I would be concerned about if I was a WI owner. The JOA may very well provide for that, but if not the WI has some obligations to notify the operator of the name, address, and amount of interest of each royalty owner. The statute is below. If Shirley's interest is an undivided % of the whole (likely if it was given for employment) rather than a lease of an integrated tract this would be very simple because the operator would already have all that information and could pay the correct royalty due.

See Arkansas Code § 15-72-305. Allocation requirements

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Permalink Reply by Spring Branch,mineral owner on August 1, 2012 at 9:48

This field has been producing for over 40 years and has had a number of different Operators.  The Operator is taking care that the royalty owners are being paid.

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