Question for oil peeps

[Chuck Bao]

What is the standard / generally accepted time period for an oil company to send out division letters and, eventually, payments to mineral rights owners after production and sales from a particular oil/gas well begins?

[olevetonahill]

That one I had took em 8 months bro. I got my letter an 1st check around the 1st of this year. from what I could tell the well went into production in April last year.

[mojorisen2014]

Depends on the oil company. Some send out checks as early as 3 months and some hold it for a year. The ones that hold it for a year generally add interest to it but that is rare.

[Chuck Bao]

Thanks. I suppose that I really shouldn't start expecting anything until a year has lapse or about July.

[Skysooner]

Which operator are you talking about?

[olevetonahill]

Thanks. I suppose that I really shouldn't start expecting anything until a year has lapse or about July.

On that small deal I have like I said it took em about 8 months or so. When did they complete the well?

[Jacie]

Some companies won't send a check till there is something to send, say $25 minimum.

[StoopTroup]

Some companies won't send a check till there is something to send, say $25 minimum.

I was thinking the same thing. If the well isn't profitable then you might not get a check.

[Petro-Sooner]

That's what I was thinking. I think the operating company and investors get their money back before mineral owners.

[Chuck Bao]

Thanks again for the explanation. Let me see if I understand correctly. The operator will hold off on payments to the royalty owners until there is 100% payback on the cost of putting in the well. Once that threshold is reached, whether in 8 months of production, 1 year or even 18 months, the operator will then begin paying the 3/16ths to royalty owners from the start of production. Is that about right? I guess bigger wells require a longer payback period and that makes sense, but I don't remember any discussion of costs before.

[Petro-Sooner]

That's my understanding. But I could be way off base.

[cleller]

Now if the well in question were in Venezuela you gringos wouldn't see a dime.


Wrong board.

[Skysooner]

That's my understanding. But I could be way off base.

Off-base. Mineral owners get their cut regardless but as someone said earlier, they will often hold it until it amounts to something. The mineral owner gets their cut regardless of whether the investors make money or not.

[Ton Loc]

Off-base. Mineral owners get their cut regardless but as someone said earlier, they will often hold it until it amounts to something. The mineral owner gets their cut regardless of whether the investors make money or not.

Winner!

It all depends on the situation, but in super general terms you'll get your first check 3-maybe 6 months after production starts.
As long as your check is more than $100. That's the general minimum payment threshold. You can call and make them release it at $25. Also, companies generally clear out all their accounts once a year and send everyone a check regardless of the amount. Usually around June.
I've worked at the three largest companies in OKC and this is the way all of them operated. 3/16 isn't terrible. You should get a nice little check.

Call the company, ask for the DO department and give them the county/state your interest is in or your owner #. Someone should help you.

[Petro-Sooner]

Good to know. Thanks

[soonerbrat]

On that small deal I have like I said it took em about 8 months or so. When did they complete the well?

sometimes when they are finished drilling it still takes months to complete it.

[Petro-Sooner]

Is it possible for mineral owners to get a copy of the electric logs if requested as apart of the deal?

[OUmillenium]

ABNG usually won't send a check until payment builds to $100 or more.

Conoco-Phillips minimum is around $65 I think.

Not sure about High Sierra

[olevetonahill]

My baby deal, 1/3 of an acre :tongue:
Chesapeake deal. well was completed Im guessin from what I can understand last April. bout Jan 3rd I got a check for right at 400 bucks and nothing since,
How they work that?

[Chuck Bao]

That one I had took em 8 months bro. I got my letter an 1st check around the 1st of this year. from what I could tell the well went into production in April last year.

Good call on the 8-month wait, Olevet. I finally got my first check from XTO today for production from Aug '12 to Jan '13.



My baby deal, 1/3 of an acre
Chesapeake deal. well was completed Im guessin from what I can understand last April. bout Jan 3rd I got a check for right at 400 bucks and nothing since,
How they work that?

Well, I hope that it is not another 8-month wait. ;)

[Jacie]

My baby deal, 1/3 of an acre :tongue:
Chesapeake deal. well was completed Im guessin from what I can understand last April. bout Jan 3rd I got a check or right at 400 bucks and nothing since,
How they work that?

If you were paid $400 and your royalty consists of only 1/3 of an acre, the owner with several acres in the unit is probably driving around in a new truck about now.

Let's do some pretend math, suppose it is a 10-acre unit and the well averages 100 barrels of oil per day (bopd). That is 10 bopd/acre you get 3/16 of one third of. So if the operator is paid $100/barrel then every day you accrue $100 x 3.33 x .1875 (3/16) = $62/day more or less. If the well is defined by a larger unit (a likely possibility), the production and price per barrel are both less than the above assumptions (also likely) that $62/day is no doubt much less. Hence, the operator will hold off on those royalty checks till there is enough to warrant the effort of cutting a check and mailing it.

[Chuck Bao]

If you were paid $400 and your royalty consists of only 1/3 of an acre, the owner with several acres in the unit is probably driving around in a new truck about now.

Let's do some pretend math, suppose it is a 10-acre unit and the well averages 100 barrels of oil per day (bopd). That is 10 bopd/acre you get 3/16 of one third of. So if the operator is paid $100/barrel then every day you accrue $100 x 3.33 x .1875 (3/16) = $62/day more or less. If the well is defined by a larger unit (a likely possibility), the production and price per barrel are both less than the above assumptions (also likely) that $62/day is no doubt much less. Hence, the operator will hold off on those royalty checks till there is enough to warrant the effort of cutting a check and mailing it.

I'm not driving around in a new pickup truck just yet. I still think that it would be helpful for mineral rights owners if oil companies would disclose a little more information, in this case exactly what their threshold amount is that makes cutting monthly, semi-annual and annual checks worth the effort for them, even for people with a third of an acre.

Mine was a computer generated check and I wonder if a human even had to touch it and the postage stamp costs something like a dollar. Whatever...and I do like that the current system supports small operators who may not have the automated payment technology of the large national and international oil companies. What I do object to is the notion that when this large oil company owes me money from our contract and then insists that I should be happy to take no information and just accept any check whenever they deem fit to send me one.

[cleller]

If you were paid $400 and your royalty consists of only 1/3 of an acre, the owner with several acres in the unit is probably driving around in a new truck about now.

Let's do some pretend math, suppose it is a 10-acre unit and the well averages 100 barrels of oil per day (bopd). That is 10 bopd/acre you get 3/16 of one third of. So if the operator is paid $100/barrel then every day you accrue $100 x 3.33 x .1875 (3/16) = $62/day more or less. If the well is defined by a larger unit (a likely possibility), the production and price per barrel are both less than the above assumptions (also likely) that $62/day is no doubt much less. Hence, the operator will hold off on those royalty checks till there is enough to warrant the effort of cutting a check and mailing it.

I know this is all hypothetical, but is the "unit" thing you're using the spacing order stuff? They are drilling a well across the road from us. Somehow we ended up owning 6 acres of minerals under our 160 acres. The legal paperwork we got got, I guess a spacing order or something, specifies a 640 acre drilling area.
So I've assumed in it does hit something, since we only have six acres it won't amount to much. On top of that, it seems to be gas they are hitting around here, which is pretty cheap at the moment.