Our family was contacted by Chesapeake requesting a W-9 for potential new wells. Not having any leases with them I requested a plat map which showed a small amount ( about 1 acre) in the stated section. Upon further review I discovered that two vertical wells had been drilled about 10 years ago in that section by Justiss Oil. A review of their plat omitted the area we own.
The Justiss well is #236129 -- CV-RA-SU128. My question is for this type of well do they do a whole section like a Hansville well or is it a smaller area like the vertical oil wells? If it is the whole section how do I go about and get paid since there is no contract and never had been any correspondence with them?
CV RA SU128 was approved as Order No. 191-A0175, Caspiana Field on June 14, 2007. The unit covers all of Section 16 - 14 North, 12 West. You would share in production from all wells drilled in that unit. Although Justiss may have overlooked your 1 acre interest, you can only qualify to recover the monies owed for the last three years of production. Obviously, Chesapeake found evidence of your ownership in the public record, so why didn't Justiss? I suggest that you send a demand letter to Justiss for back payment and include the Chesapeake plat and a copy of the conveyance document evidencing your ownership. If the ownership changed during that time, between now and 2007, or a different instrument was filed in the public record that might more clearly evidence your ownership, that may have some bearing on Chesapeake finding it and not Justiss.
Great. As always thanks for your excellent information.
You're welcome however I should add that as an unleased mineral interest in the Justiss wells, each well would have to recover its cost to drill, complete and operate before you would be owed a payment. Since you are not under a lease, the three year recovery period may not be the same as it is for those who are leased and owed royalty. Has Chesapeake offered you a lease?
Not yet. I just sent them the deed info yesterday and included a request for a lease negotiation. They replied that they had received it and would be reviewing it. I figure it would be cheaper for them to lease it rather than provide me all the production detail.
As for Justiss, I don't expect much but I did review Adams vs Chesapeake just in case.
Re: Justiss. Mistakes get made and small tracts are sometimes overlooked. I think you should also send your deed to Justiss and see their response. It sounds as if Justiss has farmed out the deep rights to Chesapeake and will continue to operate the CV depths. You might as well get in pay with them also. I'm pleased, up to this point, that CHK performed the required title due diligence and recognized your ownership interest. They have a very checkered past with owners of small mineral tracts.
<They have a very checkered past with owners of small mineral tracts>>>
There is one swampy area of Louisiana to which "they" dare not venture lest "they" may never be seen again.
It would be a mistake to blame the CHK field personnel for the poor decisions and iffy ethical dealings of the corporate officers.
Bob Zimmerman, do you know Walter Zimmermann (ICAP Technical Analysis analyst) or Robert Allen Zimmermann? Of course, they both spell their last names with two n's, instead of one.
It would be time consuming to comment not knowing the field name or the Township and Range for Section 9.
It appears that several operators are finally catching up to getting unit surveys completed and filed with the LA Dept. of Conservation as of late - we have experienced the same rush by CHK and other operators in rectifying royalty payments based on incorrect estimates of tract sizes within the units from wells drilled 5+ years ago.
It would be good to hear from other mineral owners as to their experience in how they are treated. In cases where the new survey showed your acreage participation as being greater than what was estimated under your lease, did the operator make adjustments to your royalties and/or bonus consideration? And, vice versa, has anyone experienced a recoupment of royalty payments for "overpayment" by your operator when the survey identified lesser acreage to your interest?
Rankin, read through this discussion.