Oil leasing and drilling activity aro...
kennedy 817

Hurst, TX

#1650 Mar 25, 2013
Mark, I have heard of companies that will make such loans at credit card rates. I wouldn't recommend them. They prey on mineral owners.

Mark, did you know that even if you have good/marketable title hat you ould be over a year away from a royalty paymen, after the confidential period?

That even if you have good title, that the law says that the operatr owes interest if he does not pay wihin 150 days, not that the operator must pay?

If you do not have the equivalent of a deed in your own name, recorded in the county recorders office, you probably do not have good title. If a probate must be done to give you good title, it must be done in ND. ND doesn't recognise probates from other staes, if the probate was somewhere else, you still need to probate in ND. If your title is not good, the operator doesn't have to pay you and doesn't owe you interest on the money when you do get good/marketable title.

I personally have been owed royalty for my oil being produced for 5 years. If you take out a loan at credit card rates, how much would you have left after 5 years of interest even if you didn't default on the loan? continued
kennedy 817

Hurst, TX

#1651 Mar 25, 2013
Mark, other things can happen. I had 2 wells that were not fracked for 9 months after they were off the confidential list. Then the operator might let them produce flat out for a month and the next month cut them back by 1/2. Many people are surprised by how little they get for an oil and gas lease. Read what I posted on page 80.

Are you absolutely certain you have wells? All permits for wells have confidential status, the permitted wells are named, are assigned a number but might never be drilled. I have had permits expired, cancelled, had the spacing change hands to a different operator and new permits acquired over a period of years until finally 2 wells were drilled last year.

If you look for your wells on the confidential list at the NDIC O&G site and look for the date at which the wells come off confidential, if there is no date, they probably have not been drilled yet.

If you will give the township, range and sections I can check if they were ever drilled. I've been through most of this before, I have 11 wells and a good idea of what I am talking about. I just want you to have as much information as possible.

Sparta, WI

#1652 Mar 28, 2013
Does anyone know how long it takes for drilling to start once it has been approved/permitted location to drill? Was approved in February.

Hayward, CA

#1653 Mar 28, 2013
Sara wrote:
Does anyone know how long it takes for drilling to start once it has been approved/permitted location to drill? Was approved in February.
We were permitted last Feb amd it waa spudded in oct and drilling completed end of Jan. It all depends on the oil company, the number of rigs and their schedule. Sometimes they quickly drill in a number of separate sections to hold the leases and then come back and drill more later. Sometimes they simply build the pad and drill multiple wells at once to save money.

So don't spend your money yet.

Longview, TX

#1654 Mar 28, 2013
Alot of factors play into the exact timing of the actual drilling after a permit has been issued. Also, just because a permit has been issued, there is no certainty that the well will actually be drilled. One factor that is very important is the quality of the wells around your area. If the drilling within the proximity of your area is very good, chances are your well will be drilled. If the production figures are poor, the chances get slim that drilling will occur. Another factor is the length of the lease. If the lease is nearing expiration, chances are that drilling would occur, if the operator has this in mind. Another factor is the rig availability. Operators tend to have a limited number of dedicated rigs and these are usually involved involved in drilling on expiring leases. Finally, it comes down to wait and see game after the permit is obtained. You as a mineral owner can stay abreast of what is occurring in your area and this will give you a hint as to what might occur.
kennedy 817

Hurst, TX

#1655 Mar 28, 2013
Sara, th avice above is good. I wuld only add that a permit only costs about $100, eight cents an acre for a 1280 spacing and companies have no worry about, expiration, renewal, cancelling or relocating and re-permiting. As Charles said, the majority of te lease expirations would be a much better indicator of when an operator really should drill. Good luck!

Williston, ND

#1656 Mar 29, 2013
Neil Ray of the National Association of Royalty Owners, which helps landowners get their fair share of royalties from oil and gas companies that drill on their property, said thatís the way it works in his home state of Colorado.
illinois heirs


#1657 Apr 5, 2013
I found out that an oil company has run a pipeline into our minerals section as of March 2012. We have not had royalties from this and I called the company. They said they are in process of sending out Division Orders now. My questions are: if I didn't call them on it, how much longer would they have let it go. And, would they owe us a penalty?
If so, how do we prove it and would the ND Gas & Oil commission like to know about it? AND, is it even possible to be an oversight on their part?

United States

#1658 Apr 5, 2013
Illinois heirs:
I believe in ND that the operator will owe interest after 150 days of the first sale of oil/gas. This is assuming that your title is good. Further, my notes state an interest of 1.5%/mo; 18%/yr. is applicable. Also, the operator must pay the interest but on their own timeline if they elect to do so. Most will not let the interest accumulate into a large amount but you never how any one operator runs their operation.
illinois heirs


#1659 Apr 10, 2013
Can anyone tell me when XTO started selling the oil/gas from their well #180527 in 36- 148 96 of which status date is 3/15/12 named TAT STATE 14X-36B. Have not received royalties on this but am promised DO and checks will go out. Maybe they owe us penalty as per a previous question I asked.
kennedy 817

Hurst, TX

#1660 Apr 12, 2013
Heirs, oil was sold from your well in March of 2012. Looks like they owe you some interest. By my count if they paid you now they would owe interest on 95,733 barrels. starting at 9% for the first months production down to 1.5% for the last month they owe interest. The operator gets the last 150 days interest free whenever they do pay because they had 150 days to pay to begin with. I think that is garbage, if they ae a year late, the operator should have to pay interest on the 150 days also.

Above covers the interest. I would also say that your cumulative production as of february was 116,556 barrels, a very good well.

One more thing, I have heard people say that they don't want the operator to rush in paying them because none of their investments are returing as much money as the interest so they hope it takes the operator a long time to pay. Just a thought.
illinois heirs


#1661 Apr 13, 2013
Thank you to Kennedy and Charles. Until I see the Division Order they are going to send, and unless it specifies if they are paying any penalty, how will I know what the penalty amount should be?

And, should I confront them prior to receiving the D.O. that I think they owe us a penalty? I just don't know what to do exactly. Is a penalty figured by using the decimal interest or what?
Should our lawyer look into it? What kind of money are we talking about on 96,000 barrels??
Worth enough to pay a lawyer?? Help.
kennedy 817

Hurst, TX

#1662 Apr 13, 2013
Heirs, the division orsr will have nothing to do with the late payent penalty. The division order could come a year before or a year after the first check.

Heirs,I would just wait for the first check. The operator is supposed to pay inteest by law on the first payment if t i made more tan 150 days afterfirst sales. The law says theoerator is to py interest witout being asked, but they break that law regularly. Just wait until you get your first check and if it does not list interest for late payment, I would then inquire telling them that you know about the law. It should be as simple as that.

I cosider the interest a good deal if you know to collect it, many mineral owners in ND don't though. A bank CD might pay 1.5% interest a year, where the interest on late first royalty payments is 1.5% a month.
illinois heirs


#1663 Apr 13, 2013
WOW. Very good information. You are making me smarter every time I talk to you!! Okay, here is another question: What is the penalty figured on? Is it a percentage of the daily price of a barrel of oil or MSF of gas? I haven't used the calculator on this yet....waiting for your reply.
Or, I could use a nominal figure of 85.00 a barrel and figure it out that way. This could add up to a lot of money. Wahoo.
kennedy 817

Hurst, TX

#1664 Apr 13, 2013
Heirs it's a pretty tedious computation, 1.5% per month, so if they were only 13 months late, they would owe 8 months interest becase they get 150 days free.

They would owe 12% interest on the first months sales of 10,510 bbl

10.5% interest on the second months sales of 10,612 bbl

9% interest on 11,896 bbl for the third month

7.5% interest on 15,003 bbl for the fourth month

6% interest on 12,353 bbl for the fifth month

4.5% interest on 10,163 bbl for the 6th month

3% interest on 9,254 bbl for the seventh month

1.5% interest on 7,477

This was assuming that they pay this month and assuming that you have good title which I assume because you have been getting paid for the est of it.

That is what we know of right now, for sure. They may be a few more months late adding 1.5% more interest to each months late payment for each month that passes before the first payment, while more months also become past due adding to the total.

Your first check should have the amount sold and the amount it sold for on the check stub.

They will not be happy to pay the interest as it is now, and I almost guarantee that they will not volunteer it. The may try to say you have a title defect and if they do, you need to demand to know what it is, after all you could not fix it and ever get paid if you don't know.

If you actually did have a title defect, they wouldn't have to pay the interest, so make sure of your title if you need to. Continued
kennedy 817

Hurst, TX

#1665 Apr 13, 2013
Heirs, I knew a woman hat Oasis said she had a title problem because they owed her 18 months interest.

Oasis never told her what the title defet was supposed to be. The woman never did anything to improve her chain of title but Oasis began paying her anyway.

Oasis had been paying her sister all along with the identical chain of title.

If there was a title problem, it was the operators fault some mistake in the title opinion or poor landman work.

You are not responsible for the operators mistakes or everyone would have a title problem and nobody would ever receive interest.

The operator can't clean up your title for you, because if they had the power to do so, the operator could also just transfer your title into their own name (stealing) and they would never pay anyone. And do't doubt for a second that they would do it if they could get away with it.

Check your title if needed, be firm, interest on payments more than 150 days after first sales carry an interest penalty by law in ND.

United States

#1666 Apr 13, 2013
Michael Kaminski wrote:
It is illegal for them to drill any closer to your property line that the current distance allocated for by the regulatory agency. Nor can they drill closer to your property line by directional drilling process.
If they do, then just email me and I'll help you out.
If you ever want to know what is down there on your property. I have technology that can see what's down there and would be happy to share that information with you.
Hi Michael,
Please contact me at [email protected]

United States

#1667 Apr 13, 2013
Hi Michael...please contact me at [email protected]
illinois heirs


#1668 Apr 15, 2013
Kennedy you are a most helpful person! I used your figures along with 85.00 a barrel sale price.
Then took my percentage every month. The total was 514,032 in interest. Then I divided that figure by 1,000 possible mineral owners on this well. Comes out to $514 per person. Am I calculating right?

I don't know if there are 1,000 owners; I don't know the daily sale price. They could weasel out by saying they didn't have enough royalty to meet their check requirements and therefore didn't send anything within the period after 150 days. I say that is not true because our newer wells hve been paying way before 7 months and we have 17 heirs sharing the proceeds. Could the lawyer find out the true facts if we aren't satisfied?
kennedy 817

Hurst, TX

#1669 Apr 15, 2013
Heirs, I don't know if you also divided by your royalty amount. I believe you did.

I might suggest that instead of 1,000 that you divide by 1280 and you would have the amount of interest per acre right now.

Isn't math fun? You also have to remember that each additional month late adds not just another month at 1.5% but adds 1.5% to the interest that has already accrued for each of the past months.

It's not huge. I think the operator would have to get more than a year + 150 days behind before it would become a problem but it's still worth collecting.

Most people would never get it anyway because they would not know about the law....and law or no, the operator is not going to voluntarily send 1,000,000 dollars that he might have easily kept so only those who complain will get interest.

I wouldn't borrow trouble with the lawyer until you see what you get. If they don't pay soon, even if they try to underpay, i should be substantial.

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