Note: in a long note like this, there will be typographical and content errors.
The reader has interests in this location: section 31-153-103. A screenshot of part of the deed:
The reader has been receiving royalties from this well for quite some time:
- 22475, 761, Oasis/SM Energy, Dishon 1-30H, Ft Buford t3/13; cum 269K 8/24;
- the Dishon well is sited in section 30 with bottom hole in section 31; 1280-acre spacing, sections 30 / 31 - 153 - 103
Recently the reader noted that she was receiving royalties from a new well:
- 39910, F/A, Oasis, Andrews Federal 5301 12-24 4 BX, Ft Buford, t4/24, cum 90K 8/24.
- This well is on a six-well pad, three horizontals running north and three Andrews Federal horizontals running south. These are extended long-lateral horizontals, three-section laterals or three-mile long horizontals; two of these south-running horizontals are three-section spacing (1920-acre spacing) but it just so happens that the Andrews Federal ... 4BX well (#39910) is a section line well and the spacing unit is six sections:
Note that one of the six sections, 31-153-103 is the section in which the reader has minerals, and is also the section in which is located the bottom hole of the Dishon well.
Production from this section-line well, #39910:
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 8-2024 | 31 | 23014 | 22893 | 51343 | 17440 | 16888 | 552 |
| BAKKEN | 7-2024 | 26 | 18750 | 18757 | 43347 | 13892 | 13401 | 491 |
| BAKKEN | 6-2024 | 30 | 23330 | 23321 | 50849 | 16586 | 13498 | 3088 |
| BAKKEN | 5-2024 | 31 | 22593 | 22512 | 50963 | 16217 | 15785 | 432 |
| BAKKEN | 4-2024 | 30 | 2126 | 2080 | 21741 | 4299 | 4087 | 212 |
So, again, #39910, the Andrews Federal well is sited almost a mile away from the Dishon well, in section 24, with the bottom hole in section 31 (two different townships); the horizontal runs south along the section section line; the spacing unit is a six-section spacing unit, encompassing sections 19 / 24 / 30 / 29 / 31 / 36.
The Dishon well is a two-section, two-mile extended lateral (two-section spacing).
The Andrews Federal well is a three-section, three-mile extended lateral (six-section spacing).
See maps below.
The typical spacing unit in the Bakken, is two sections, or 1280 acres.
If one owns 40 acres in a 1280-acre spacing unit, and the lease is for 20% of the oil sold, the "decimal" would be:
- (40/1280) x 0.2 = 0.00625
However, in a 3840-acre spacing unit, (six-section spacing unit), the "decimal" would be
- (40/3840) x 0.2 = 40 = 0.00208
The reader says her decimal is 0.00004566, according to her production statement.
Some folks own as little as one acre in any given spacing unit. What would be the decimal point for owning one acre in a 1280-acre spacing unit compared to a 3840-acre spacing unit, each unit with the same 20% royalty rate:
- (1/1280) x 0.2 = 0.00015625
- (1/3840) x 0.2 = 0.00005208
At 18%?
- (1/1280) x 0.18 = 0.000140625
- (1/3840) x 0.18 = 0.000046875
Going one step further: if the well produced 10,000 bbls in that month and the selling price was $75, then:
- $75 / bbl x 0.00015625 x 10,000 bbls = $117 vs
- $75 / bbl x 0.00005208 x 10,000 bbls = $39.
The reader says she was paid about $66 the oil from that well recently (in a monthly statement) and the price of oil sold was $74.03. So, everything sort of adds up -- at least in the "ballpark" as they say.
Disclaimer: I often make simple arithmetic errors, and much of the above was based on conjecture, assumptions, and estimates.
