Replies to This Discussion

Permalink Reply by Dion Warr, CPL on October 1, 2012 at 13:48

Mark F:

Where is the well located? La? Tx? Ar?

• ▶ Reply

Permalink Reply by Mark F on October 1, 2012 at 15:10

The well is located in Louisiana; specifically Desoto Parish.

• ▶ Reply

Permalink Reply by Andrew on October 2, 2012 at 20:52

Mark,

I wouldn't sign any division orders until you get this sorted out. First, you may not own working interest in the horizon that the new well was drilled to, but rather have an override. This is very common in the Bethany Longstreet field in particular. Second, if you do in fact have working interest within the confines of the unit and weren't notified, you should not assume the operator has chosen to give you a "free ride."

Your first step should be to ascertain what interests you have, and make sure the new well is within the confines of the same unit boundaries as your interest. Then I would contact an attorney to advise you on your rights and options moving forward.

• ▶ Reply

Permalink Reply by Mark F on October 21, 2012 at 12:04

Andrew,

Thanks for your response.  We did have a reputable company research our interest.  There is no doubt we have a working interest in this well. I am sure the other side may have a different opinion.  We may just wait for the payout and then have an attorney get involved. 

• ▶ Reply

Permalink Reply by Dion Warr, CPL on October 18, 2012 at 14:08

Mark F:

Sorry about the tardy reply.  More questions:

Is the new well completed to the same formation as the prior well?

Is the new well located within the same unit as your prior well, or if the well is completed to a different formation, do the unit boundaries in which the new well is completed encompass lands which are a part of the lease in which you own a working interest?

What other agreements do you know of that may have created, modified, or governed this interest? (JOAs, farmins/farmouts, assignments, and well elections all have a bearing here)

There are several fields throughout the state that are "challenging" insofar as ascertaining the ownership of leasehold and lease burdens in which there have been longstanding production from multiple zones from various operators.  Unfortunately, several of them are in Desoto Parish (Beth Longstreet is one).  Interests were bounced around and traded for years by multiple players with leases being taken by one party, assigning overrides to others, then parsing off shallower production to others who operate the wells which hold the residual interests to all other depths, which are then subsequently sold off to yet other parties at various times while retaining yet other reveriosnary rights...  you get the idea.

Chances are that if they did not send notices, they either can't find you are don't believe that you own a valid interest.  If you know of others who should have received notices that would have come out of a common chain of title which created your interest, it is even more likely that the O&G company does not believe that you own a valid working interest.  At that point, you would have to contact the company via registered letter informing them of your purported ownership, with documentation of same.

Other things that it could be: (1) you may have received rights to certain units, certain zones, or even certain wells that are non-inclusive to the current well, (2) the operator could be working from errant abstracts or title opinions, or working from an errant mineral history (or no mineral history) and thus not even considering old production, or (3) the operator could have been advised of possible expiration of the agreement which created your interest due to lack of production in paying quantities or lack of continuous operations during a time of extended non-production, perhaps colored or not by the subsequent acquisition of a new lease which encompasses property which was subject to the older agreement from which your interests originates...

You get the idea.  The best thing to do is get your documentation lined up - do your research (get all applicable field orders, title, agreements, production history, etc.) and send them an initial letter stating your purported interest with copies of everything you have.  If they have quoted a unit interest decimal to you, try to ascertain (or request documentation from the operator) how they calculated your purported interest.   Do your own calculation to verify theirs, or if you come up with a different value, explain what you have come up with based upon what you have in your records.  If it gets testy or nonproductive, get an attorney.  Be sure to send all correspondence certifed or registered (return receipt requested) or by common courier so as to lay a paper trail as to your pursuit of this interest.  You want to be diligent and timely - remember, if you do have working interest, somewhere a lessor is wondering where their royalties are, and you don't want them to start pursuing you legally for not complying with your obligations as a working interest owner.  The laws governing the payment of royalties and collection of applicable royalty proceeds from operator by non-operator (LA R.S. 30:10)  have changed but only just recently, and may not be applicable to you if the well was spudded prior to the effective date of the new statute.

Finally, if you own a working interest, there are a few more things to work out than just signing a division order, and I certainly wouldn't just sign the division order until you understand all of the issues at point.  For these you definitely want professional assistance if you don't feel comfortable in doing so based upon your own experience (if you are a landman or attorney, apologies for my ignorance of your qualifications).

• ▶ Reply

Permalink Reply by Mark F on October 21, 2012 at 12:33

Thanks for your reply Dion.  No I am not a landman or an attorney. I am in the construction business, hence I am a fish out of water.

This well was completed in a different pormation than the prior well but is in the same boundaries.. We did have a reputable company research our interest.  There is no doubt we have a working interest in this well. I am sure the other side may have a different opinion.  We may just wait for the payout and then have an attorney get involved.

• ▶ Reply

Permalink Reply by Dion Warr, CPL on October 22, 2012 at 6:40

Mark:

You may not want to wait for payout, as some of the issues you raise could have legal time-dependent limitations for recovery based upon "known or should have known".  It is a bad day when you find out that you were right but you're disallowed from pursuit of legal remedy or compensation because you "slept on your rights".

Your legal counsel can better advise of you such things; the important thing that I wish to relate is that as a working interest owner there are different standards, timeframes and obligations in place that could affect you that would not be applicable to, say, an unleased mineral interest owner.

 Good luck to you.

• ▶ Reply

Permalink Reply by Mark F on October 22, 2012 at 13:30

Thanks Dion.  I believe I will heed your advise and consult an attorney.

• ▶ Reply

Permalink Reply by Andrew on December 9, 2012 at 7:52

Mark, any update on this?

• ▶ Reply