Replies to This Discussion

Permalink Reply by L Davis on February 13, 2011 at 4:08

I think that in Arkansas, there has to be documented evidence that an atempt has been made 3 times to contact a given mineral owner.  The newspaper ads looking for mineral owners is probably one method of trying to locate mineral owners where there is no other record of how to contact them.  Lately there have been several of these ads and all of the land descriptions fall in the state line trend for the brown dense and also represents places where some of the earliest leasing was done.  If what I am saying is correct, we may see several wells in Union County this year.

 

I wish someone from Arkansas with more knowledge than I have, would get active on these discussions.

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Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2011 at 6:25

IMO, the newspaper ads are efforts to comply with the regs regarding notice of IPs.  The transcripts and notes of communication between applicant's landmen and selected mineral owners within the proposed unit boundaries are required to force pool mineral owners who are unwilling to accept the lease terms offered.

 

I too wish for some thread participation by members with land experience in S. AR.  Long ago we had some but they are no longer active on GHS.  In the meantime, we will just have to do the best we can.  Much of the basics are easily accessible here:

 

http://www.aogc.state.ar.us/OnlineData/Forms/Rules%20and%20Regulati...

Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2011 at 8:16

I believe that the Arkansas State Leasing Manuel link has been posted previously but for the convenience of those who have joined the discussion in mid-thread:

 

http://www.aogc.state.ar.us/PDF/Leasing%20Manual%202008.pdf

 

Page 24, Procedure to Obtain an Integration, addresses the regulations pertinent to this portion of the discussion.

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Permalink Reply by Polly Ann Foote on February 13, 2011 at 8:16

We have mineral interests in South Arkansas and we have been forced to lease twice in the last 3 years. We live in Missouri and we do take the "Banner News", Magnolia's paper, but that is not how we found out. In both instances we were contacted by a law firm in Magnolia and were told we had 30 days to lease. One lease was in Nevada county where the operator only leased to mineral owners who would accept a 1/8th interest. Thus the rest of us were forced to accept 1/8th. We had originally turned down the option to lease for 1/8th. The other instance involved Hunter Energy and the land in the section where the Watson-Fullenwider well was located. In that instance we were offered a 1/5th. There is a section in the courthouse where such cases are filed, and I have now taken to researching that file when we are there. One such file said they had listed the notice of requirement to lease in the paper for a certain number of times. There is more leasing now than in the past several years. Betsy Production has brought in one well in 24-17-21 (Boreing) and is drilling another in that same section and has leased from us in 23-17-21. Plus Cypress is planning to drill in the Lake Columbia area. In 2009 we leased about 150 acres in the Atlanta area to Border.

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Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2011 at 8:25

From the AR. Leasing Manual, Page 23, excerpt:

B. INTEGRATION OF UNLEASED INTERESTS
Once the Commission establishes a unit, the remedy of
integration becomes available. Integration is provided for in
Section 15-72-301 through 324 of the Arkansas Code. The code
allows the Commission to integrate the interests of mineral
owners who refuse to select from the options given (which may
include the execution of a lease, prorata share of participation in
the unit, or a farmout of the owner's interest). Id. Section
15-72-303.
One option available to a non-consenting owner is to
neither sign the lease nor participate but to be carried by the
operators for costs. Section 15-72-304(b)(2). If the well is
productive, the operator may retain the revenue allocated to
those non-participating interests until it reaches an amount those
parties would have paid for participating "plus an additional
sum to be fixed by the Commission." The owner facing an
integration can also elect to participate in the operation.

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Permalink Reply by L Davis on February 13, 2011 at 10:13

Skip and Paul:  Thanks for all the info about interested parties.  I still wonder about investors who buy a share in the well without having any mineral interest.  Can they be identified before the well is drilled?  If the well produces, then everyone with any type of interest will show up on the Division Order.  I do not think that Brammer/Anderson would be the only working interest owners in these wells with the cost being so high and the chance of success being even higher.

 

I talked with someone at church this morning that works in the Union County Courthouse and that person said that leasing is still going strong in Union County.  Pinebelt is the largest but they have independents coming and going on a regular basis.

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Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2011 at 10:26

Anyone can "buy into" a well as a Working Interest owner but it is seldom reflected in the public record excepting when it is conveyed from one party to another. So, no, they can not be identified before the well is drilled.  Division Orders are not recorded in the public record.  Anderson is more than capable of funding these wells however it is customary for those who deal with the level of risk associated with oil and gas exploration to lay off a portion to others.  Anderson is the energy company behind these wells and Brammer is their "contract operator".  It is unlikely IMO that Anderson is behind the wide spread leasing.

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Permalink Reply by Polly Ann Foote on February 13, 2011 at 9:46

In both instances it was a court case filed in the circuit court that required us to lease. Perhaps it was based on those sections of the Arkansas Code, but we never received any notification from the Arkansas Oil and Gas Commission such as that filed with regards to the Brammer forced pooling. Lessee had acquired in excess of 50% of the mineral rights. Actually lessee was going back into an old well which was described as having become profitable with the increase in the price of oil.

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Permalink Reply by The_Baron on February 14, 2011 at 4:00

In Arkansas there are several tools used to lease all the interests. Forced intergration and Receivership leases come to mind.

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Permalink Reply by Polly Ann Foote on February 13, 2011 at 10:31

I thought that everyone who had an interest in a well had to sign a division order in Arkansas. However, we owned only a royalty interest in the Betsy Production Boreing well which came in in late 2009 and we never received a division order. We did not realize we had an interest until we received a check last week for all of last year. Check said it had been held in suspense. We only owned 3 royalty acres in a 4 acre tract straddling sections 23 and 24.

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Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2011 at 10:38

Even if a mineral owner chooses to sign a D. O., it is not filed of public record.  Each interest will see only their proportional interest information.  Not that of others.

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Permalink Reply by Polly Ann Foote on February 13, 2011 at 11:09

I have just received a division order from Lion Oil and everyone's interest is included. It has been this way for as long as I can remember for this is the way we check to see that each family member is given their correct percent.

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