Chesapeake send me a new division order on a well that has been producing since 2010. Original decimal interest and acreage were 0.01047188 on 33.51 acres. The new division order states the total unit acres changed as the result of a unit survey plat from 640.0 to 650.596 acres. The result is a change of decimal interest and acreage to 0.01099515 and 35.767000 acres. I appears to me this result in an increase in royalty as a result of the new survey. I read where other mineral owners have had royalties withheld as a result of surveys which reduce the decimal interest for the owner. Will Chesapeake reimburse me the difference retr0active to the date of the well completion? Will I have to make a written request.? Of course I have a call into them with no response. The change goes into effect on November 1.
They should pay the difference month after receiving new division order. The data to support the amount will be on revenue check detail
The move to drilling Cross Unit Lateral wells (HC) and the requirement to allocate production to multiple units has been the catalyst for operators to perform surveys years after forming their drilling units. Far too many companies did not do as good of a job as they should have on the front end because they were racing to lock up acreage and HBP leases in the first years of the Haynesville land rush. So now proper surveys result in changes to the acreage totals for units and tracts. Very few governmental sections are exactly 640 acres. And a lot of individual tracts within the units are not the size their owners thought. Yours is not the only decimal interest which has changed.
You can pursue this on your own if you wish however what is at stake for 33 acres of minerals in a producing unit justifies the services of an experienced O&G attorney. First off, LA law allows you to get paid without signing a Division Order. The operator already has your tax information. The LA Mineral Code limits recovery of back royalty to three years but owing to the mistake in unit and/or tract size you may have options for recovering more.
First, congratulations on CHK making a small increase in your mineral interest. From my experience, I would say that within the next few months you will get a correction all the way back to the initial production date.
I have received two revised division orders in the last few months from CHK with different amounts on the same property. The first had a cover letter advising that the section had increased by a bit over 8 acres from the original number of acres in the section. I was able to check the math and everything came out as they stated with a very small increase in mineral interest. The next revised division order gave a different set of figures with a different number (but smaller) for acreage in which I have an interest but in this case the mineral interest was decreased because of the additional acres in the section. I tend to always check the math, but couldn't figure out the second revision. I contacted CHK trying to find out how they determined that the tract had first increased and then the increase was decreased, but I basically given several "I don't know" and "That comes from the Land Survey department". The young woman who called me back was rather condescending considering that she didn't have any of the information I was after and in one case assumed that I was thinking that my small interest should be credited with the entire 8+ acre increase in the section. I assured her that I was able to compute mineral interest for my small acreage but just couldn't make their math match mine and that I generally checked the math on division order before I signed them. Her response was that since I was in pay status I didn't have to sign the division order and they would just go ahead with their figures, as if I didn't already know that too. Plus ca change, plus c'est la meme chose. At least we can count on CHK.....
I recently received a change in percentage and a nice $12,000 check from Chesapeake! I never received a new division order. The percentage change on the check stub was substantial and dates back to the wells beginning. I haven't contacted Chesapeake we all know how hard it is to get someone there who knows whats going on, but ya know I'm okay with that this time around!
Corrected tract and/or unit acreages will mean some mineral interests will receive additional royalty often back to first production, so multiple years = a substantial amount of money. The other side of that coin however will be those that have their decimal interest reduced and will have royalty suspended until the operator recoups what was paid in error. It is a zero sum equation.
I recall hearing about a lawsuit dealing with well spacing and percentage corrections I don't have specifics.. could this be a reason for the percentage change? This is Sec 9 t16n r16w. Know anything about that?
Well spacing within a unit is approved by the state before a well is permitted and drilled. So that wouldn't cause a correction. Section 9 is not included in an HC well so the reason is not obvious. It could be a mistake with the original Division Order but only CHK would know it that was the case. I wouldn't rush out to spend it until I knew the particulars.
Section 9 has 645.52 acres.
Do you know if this section was recently re-surveyed?
Have no idea about a survey. All the old survey maps that I have looked at say 645.52 acres.
Whats an HC well?