$500.00 check from Audubon Oil & Gas for drilling on the section next to mine?
Jack's 20 acres of HS land is in a section corner. (section 21 T10N R11W)
A man from Audobon Oil & Gas called Jack Blake today and wants to give Jack a check for $500. He says it is because they (SWEPI) are drilling a well on the section next to me and the wellbore will go under our land at some point, but it will be perforated in the section next to me.
SWEPI already drilled a well in my section and the guy from Audubon said they got the bordering land owners to our section to sign these agreements for $500.00 each. He says it doesn't matter how much land you have they pay only $500.00 for this.
He said they do this to get the maximum production from each unit.
He kept saying signing and accepting the $500.00 is the "neighborly" thing to do.
Jack asked the guy if Jack would be offered more if he waited and the Audobon guy said if you don't sign, they just kind of redesign the well bore to not go under your land.
The guy wants to get Jack to sign within the next several days.
What should Jack do?
Thanks,
Jack Blake
Views: 476
Replies to This Discussion
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Permalink Reply by The_Baron on -
Well jack,
1) take the money. You don't lose anything, and your neighbors get a longer lateral.
2) turn down the money, They redesign the lateral, you lose an easy $500.
or
3) turn down the money, they come back give you more. (ask for a transportation fee or overide if you really feel greedy.)
Personally, I would take the money. Your acreage is insignificant, since this is for a well on someone elses minerals. I would take to your neighbors, if they signed it might be worth it to do the same. $500 isn't going to change my life, but it will pay for a few good steak dinners.
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Permalink Reply by Skip Peel - Mineral Consultant on
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An experienced O&G attorney could give you an idea of what other companies have paid for a well bore easement.
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Permalink Reply by Linda Whatley on
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I like the idea of being a good neighbor......... go ahead and sign Jack!
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Permalink Reply by Checkmateking on
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please, it's getting beyond old
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Permalink Reply by Terry L. Antee on
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Checkmateking I second that!!!!!!!!!!!!!!
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Permalink Reply by Aubrey C. Sanders, Jr. on
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I would look for fine print and not accept check. I believe in being neighborly to the nth degree. I do not see your neighbors benefitting whatsover for you accepting check.
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Permalink Reply by CypressKnees on
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"He said they do this to get the maximum production from each unit."
What does that mean? I'm a dummie.
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Permalink Reply by Skip Peel - Mineral Consultant on
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By drilling from a surface location just outside the unit/section, the operator can drill the maximum length lateral which provides "the maximum production from each unit (well)". You have to use up some lateral distance in the transition from the vertical well bore to the horizontal (the radius). If a well is drilled inside of the unit, some of that lateral distance shortens the length of the producing portion of the well bore. See if this video doesn't help to make the concept more clear.
http://www.oerb.com/Default.aspx?tabid=242
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Permalink Reply by CypressKnees on
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Thank you! That is a lovely video!
However, I don't understand if Mr. Blake's property is so important to maximizing production, then why isn't he part of the regular unit..and be paid accordingly? He's more than just a "kick-off", right?
I know, I'm thick as two planks. Sorry.
C.K.
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Permalink Reply by Skip Peel - Mineral Consultant on
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His land is not located in the unit. And I think that those who have land within the unit would not care to share their royalties with Jack since it is not his minerals being produced. There are no perforations under Jack's land. Only the radius of the well bore.
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Permalink Reply by CypressKnees on
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Got it. Thanks. Appreciate your patience!
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