Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 14, 2012 at 8:38

UMI's don't get a royalty.  And it's too involved to explain in a discussion reply box.  Read this:

UMI Basics by Caliente.docx, 33 KB

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Permalink Reply by The Shadow on March 14, 2012 at 16:54

Skip, We have a similar situation to others on this site.  On February 27, 2012 we received a letter from the Operator or Well # 241428 in Red River Parish.  Please note that this is the first notice we have received, from the operator, about our land in this producing unit.  The well was completed 10-1-10 and started production 2-1-11 according to Sonris Lite.  I wrote the Operator and received a reply, but the Operator did not answer my question concerning a lack of any prior notices or correspondence prior to the February 27, 2012 notice.  I should point out that we were unaware that our land, which is in Section 22, extended into the Mondello Unit, and that is why we have not made attempts to contact the Operator. The Operator's letter indicated Pursuant to LSA-R.S. 30:103.1 as operator of the unit, is hereby notifying us of the production of oil or gas from the unit.  If we do not know about our land in the unit does this allow the Operator to delay notification for an extended amount of time?  In addition the Operator "Unleased Mineral Inerest Payout Statement" shows sales of gas for months April 2011, May 2011 and June 2011, which do match the production amounts listed for those months on Sonris Lite.  The payment Statement says "Through Production Period June 30, 2011, First Report.  On Sonris Lie the Lease/Unit/Well production shows production in months Feb 1, 2011 in the amount of 58,228 MCF and on March 1, 2011 in the amount of 256,492 MCF.  Where is or what has happened to that gas produced February and March 2011?  Why would the First Report not show any sales of the February and March 2011 production on the First Report?  Why is the First Report so very old and why has there been no Production Reports for the months of July, August, September, October, November and December 2011.  The Operator did indicate that our ownership was recently determined as a result of additional title work completed in this unit.  Is this realistic and quite possibly the real reason.  If this is so I can accept this.  When I stated to the Operator that we had no opportunity to negotiate a lease, the Operator indicated they are not doing any new leasing in this area due to budgetary constraints.  The Operator said if we would be interested in granting a free (no signing bonus) lease in exchange for future royalty payments from this well, to let the Operator know and their leasing agent would contact us.  How nice of the Operator to allow us to do this.  Ha! Ha! We need your help, as well as others, concerning this particular situation.  Know this is lengthy, but wanted to spell out all the facts as much as possible.  Thanks for all that you can do for us.

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Permalink Reply by Skip Peel - Mineral Consultant on March 15, 2012 at 3:55

Thanks for going into detail.  How many acres do you own in the unit?  And what was the subject of the letter you mention?  Operators are not require to notice mineral owners for wells, only for unit and alternate unit well applications.

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Permalink Reply by The Shadow on March 15, 2012 at 5:20

The Operator indicates that we own approximately 6.1061 net acres out of the 639.310 gross acre Unit making our proportionate share of Unit expense and production 0.9551%, out "Proportionate Share".  The Operators letter is notifying us of our land in the Unit and that Encana is the Operator of the Unit.  Attached to the front letter was an Affidavit signed by a Land Negotiator, an Unleased Mineral Interest Payout Statement and a Permit Plat for Sections 28 & 51 T11N-R9W Red River Parish.  NOTE: Our 6.1061 is a part of or touches a much large tract of our property in a section that corners this Unit.  This may also be of interest to you.  Our larger property in the other section has a well site flagged off, and another well site flagged off in another section that joins our property, but no notification of either by the oil and gas company, which is another major oil and gas company.  We found out from a friend and I began making many phone calls to track down the company and the people involved in the research of property titles, ownership and land boundries plus the Leaser if they decide to drill these flagged Units.  Even this did not turn up our property in the Production Unit.  Please let me know if this is how it works or what you can about this particular situation, and contact me if more information is required.  One more fact our property is on an Oxbow that had Accretions from the Red River.

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Permalink Reply by Skip Peel - Mineral Consultant on March 15, 2012 at 5:30

The "flagged" locations are likely well sites.  As I mentioned above there is no requirement for an energy company to notice you for a well.  Also "flagged locations" are not wells.  It is rare but not uncommon for a site to be flagged but not end up having a permitted well.  Also the surface location of a horizontal well does not always indicate which section is being produced.  You have to look that up on the state database, SONRIS.  Accretions can get tricky, as can the lignite mine regulations.  If you have a larger acreage position in the adjoining section or sections, you need to consult an experienced O&G attorney.  Also regardless of the prior circumstances I would take a no bonus lease on the 6 acres if I could get a vertical Pugh clause, a no cost royalty and payment on all production from day one.  You can search the site archives for the experiences of those who have gone that route.  Unless you wish to employ accountants and attorneys experienced in O&G UMI is not advisable.  And definitely not worth it for 6 acres.

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Permalink Reply by Andrew on December 8, 2012 at 12:28

Shadow,

I think you'll get a better response by 1) Reading over Caliente's Unlease Mineral Interest (UMI) Basics here, or 2) Posting a new discussion in the Unleased Mineral Owners group.

It's been a few months since you last posted on this topic. Is there any update?

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