Falsifying Production?

I think that the oil company that is holding our oil rights on production may be falsifying their production.  Is there a way to check that?

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Permalink Reply by Gunner Ostergard on March 28, 2013 at 12:05pm

Actually court case has repeatedly concluded that for a lease to be HBP it must produce enough to pay all costs of production and still make a profit.  So if the well is producing $100 worth of oil a month and it cost $189 a month to pay a quy(gal) in a truck to pick it up and ship it off to be sold,  then no, it is not "producing" 

Permalink Reply by David Perotto on March 28, 2013 at 12:27pm

Gunner,

You are missing Mr. Brink's point, he is in agreement with you. All attorneys are not bad simply because they are an attorney. He is one of the good guys, based upon his participation on this site.

Permalink Reply by David Perotto on March 28, 2013 at 10:03pm

So Gunner,

Am I to take it that you cant admit when you are wrong? My post was about you, not attorneys.

Permalink Reply by Billy Park Whyde on March 28, 2013 at 12:40pm

Couple of things is the $1200 royalty? If so then you must consider the producer of those wells is getting the remaining 87.5% very rough guess about $13,300. you already deducted the 12.5%  but the pumper might only get minimal wages plus he might be pumping 30 wells a day or more. Pumper that pumps my well may be on location for perhaps 20 minutes but he needs to unload a 4 wheeler in other cases his wells are drive ups 

Some wells only get an occasional stop by a pumper if they are electric pump jacks 

Permalink Reply by Gunner Ostergard on March 28, 2013 at 1:46pm

Dave

I have been told that I am not in full comprehension of the word irony,  but I find it damn funny that you have to state that not all attorney's are bad just because they are an attorney.

 

 

Permalink Reply by John Goold on March 28, 2013 at 1:51pm

No we only got a $150 royalty which is 1/8 so 8x150 is $1200 between two wells.  I am highly doubtful that you can operate a well for $600/year

Permalink Reply by John Goold on March 28, 2013 at 2:05pm

Actually when you subtract out the royalty it is only $525 per well.  To me that would be hard to defend.

Permalink Reply by John Goold on March 28, 2013 at 2:36pm

One problem I think I am going to run into is there is a bunch of low hanging fruit out there with clearing these leases.  Ours is a little harder and requires challenging them in court possibly.  It is going to take some time to find a lawyer that would be willing to take on this case which may very well go to court.  Ideally I would like to settle with the company holding the lease now.  They get to keep their 7/8 of oil produced we get a bonus that is comparable to what our neighbor's are getting.

Permalink Reply by Gunner Ostergard on March 28, 2013 at 2:49pm

Does the $150 payment change from year to year?  If it does not,  maybe it is not a royalty based on any production numbers.  The very perfect number of $150 sounds suspicious.  I mean if it was 185.76 one year and 126.54 the next that might sound like a ligitimate royalty.  But $150 sounds more like a vain attempt at a shut in clause.  You are a smart cookie John,  so continue as you have been and don't deposit those checks. 

 

Permalink Reply by harry frank on March 28, 2013 at 3:36pm

 about 15 years ago the guy that pumped my well at that time told me it cost the company about $300 dolllars a month to take care of my well [ that included everything pumper and office personal ] my guess now it would have to be at least double that and just maybe 3 times that

Permalink Reply by John Goold on March 28, 2013 at 3:42pm

That 150 is just a ballpark amount I think it is around $156 or so.

Permalink Reply by John Goold on March 28, 2013 at 3:44pm

It tends to vary about $20 or so year to year.

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