Replies to This Discussion

Permalink Reply by Bill R on November 30, 2022 at 14:14

UPDATE:

Another Email from Aethon, they stated the delay to provide DO's is due to Personnel staffing shortages, 

Permalink Reply by Andy Franklin on November 29, 2022 at 2:19

Thank you for that info. I will certainly be requesting DOs on any further wells from them.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on November 29, 2022 at 3:01

Bill. it's good to hear that you got a pretty prompt response from Aethon but the statement about having to request a Division Order is strange.  Would these wells be "allocation wells"?

• ▶ Reply

Permalink Reply by Nat Gas Engineer on November 29, 2022 at 5:20

Aethon isn't the only operator that doesn't provide a DO. Only received one DO from XTO in the eight wells we have interest in.  That one (for the first well) was received after contacting them about it. The person that we talked to had to check with a supervisor to confirm that they can provide it.  Eventually, they sent it after the well was in production for several months. I am not aware of anyone in our area that have received a DO.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on November 29, 2022 at 5:32

Were those seven wells allocation wells producing from more than one unit?

• ▶ Reply

Permalink Reply by Nat Gas Engineer on November 29, 2022 at 5:38

No. Of the eight total wells, only two of them are allocation wells.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on November 29, 2022 at 5:41

Did your decimal fraction change for the two allocation wells?

• ▶ Reply

Permalink Reply by Nat Gas Engineer on November 29, 2022 at 5:57

Yes. The decimal fraction for the two allocation wells is different than for the "in-unit" wells. 

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on November 29, 2022 at 9:20

Okay.  Now that we know that they are different, we need to find out where in the RRC database would be their equivalent to a LA perf letter.  For something like that, I usually turn to Julie, jffree1.  She knows the most about those types of reports and where they might be found.

• ▶ Reply

Permalink Reply by Nat Gas Engineer on November 29, 2022 at 10:47

I use the Drilling Permit (W-1) Query within the RRC to view all documents related to a proposed well. The plat (one of the documents included) for the proposed well provides the length of lateral within each unit. Using that, I calculated my decimal fraction.  Using the proposed lengths, my calculated decimal fraction came very close to the actual that is shown on the royalty summary details.  I presumed the small difference (which was in my favor) was due to the difference between proposed and as-drilled lengths. Sometimes, the plat is updated with the as-drilled lateral route however, that has not been uploaded for the two allocation wells that I am involved in.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on November 29, 2022 at 11:04

Thanks, that basically confirms what I thought the situation was.  Operators look to cut corners and lower expenses wherever they can thus their decision that a DO for every allocation well is not warranted.  In place of a DO, I would like to see operators send an "as drilled" well plat that shows the percentage of well production allocated to each unit for those lessors that may not be able to find it in the database.  That would allow mineral lessors to confirm that their decimal interest was correct.

Permalink Reply by jffree1 on November 29, 2022 at 15:06

If you will pull up the completion packet on the well (use one: API # or Permit #) there will be an "as-drilled" plat that will have the final footage within each unit which may vary a little bit from the "proposed" plat found on the W-1 page. If you request a DO from Aethon they should include their formula for calculating your % in the PSA well. I'd expect that they would provide that information if you ask for it.

It is a fairly simple formula. You have to calculate the footage within your unit as a % of the total effective lateral length (from the as-drilled plat) X your decimal interest in your unit to get your decimal interest in the Production Sharing Unit.

As-drilled plats used to be found on the W-1 page but the operators had to file an amendment to post it there so now they, mostly, just include it in the completion paperwork.

The operator has to file a Unit Declaration with the county so the state can collect their taxes and I'm not clear on why they'd think they don't have to provide a division order to their royalty owners. That DO is the one opportunity the royalty interest owner has to dispute errors and get them corrected up front. If  they fail to provide a DO you can go to the county clerk and get the Unit Declaration on the well in question and it should have a comprehensive list of all royalty owner interests with their %. The county appraisal district office would also have that information.

For anyone who has an interest in one of these PSA wells... go to the trouble to find the information you need to calculate your decimal interest in these wells. Don't take it for granted that the operator doesn't make mistakes. I doubled checked the math on a DO (not PSA well) for my elderly cousin several years ago and the analyst had made a significant error which we got corrected before Cuz signed the DO. If a mistake is not caught for years then there is little you can do to recover if the error was in their favor. You can go back four years and that is it. Anything you lost beyond four years is just gone.

• ‹ Previous
• 1
• 2
• 3
• Next ›
• Page