Dishon And Andrews Federal -- Ft Buford -- Chord Energy -- Oasis -- October 7, 2024

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.