Why are Churches Selling Their Minerals?

Oklahoma Mineral Owners,

Berlin is back (she hopes). After a long hiatus, it is time to shake off the cobwebs and start writing again.

The topic today is why churches and other non-profits are selling their mineral rights and royalties. First, it might be useful to understand how they acquired minerals in the first place.

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Why do Churches Own Oklahoma Minerals?

Mary Jane and Johnny must have been living in quite a bit of sin in order for daddy to bequeath the minerals to the church instead of his own kids. As Tolstoy probably said,

“happy families are all alike and keep their minerals; every unhappy family is unhappy in its down way .”

No matter the reason, it is now common for churches, synagogues, and other non-profits to own minerals through the generosity of their benefactors over the years.

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Why are Churches Selling Their Oklahoma Royalties?

As Berlin understands it, there are two main reasons that churches are selling their Oklahoma minerals.

1. ESG Initiatives: Churches have begun to sell their holdings in order to satisfy their constituents’ desires for the institution to be more “green.” Even Papa Frank has called for his folks to start selling their fossil fuel investments.

2. Bookkeeping Hassles: Mineral and royalty bookkeeping can be a bit of a challenge. Most families decide to sell their minerals because accounting and tracking them is a burden. Churches and other institutions sell their mineral rights for the same reason.

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Are you a Member of a Church that Would Like to Sell its Minerals?

Berlin has purchased the minerals and royalties of a number of different religious institutions over the past year. We have provided a lump sum to fund church operations and a quick closing. Please contact us if you would be interested in divesting of your Oklahoma mineral rights.

More to follow,

Berlin

Extending an Oil and Gas Lease

Oklahoma Oil and Gas Mineral Owners,

It can happen to the best of us, it was three years ago and nobody was drilling deep gas in Custer. You signed an oil and gas lease with an option to extend the primary term. Now, things are different, the "macro-headwinds" have shifted. There are folks with deep pockets paying 3x what you will be paid for your option. Even though $500/acre for a 160 acre lease on the home place would make most smile, you have a yellow equipment problem and were hoping that the original lessee will overlook the option and you will be able to sign a new lease at $1500/acre and buy that excavator you have always dreamed of. So what can you do? 

Some oklahoma oil and gas mineral owners trade their right to drill a well for a royalty and yellow equipment

Some Oklahoma oil and gas mineral owners will attempt to claim that they never received the option bonus. While most lessees who desire to exercise their option will call the lessor to confirm their address before mailing a check, the call is not required. To perfect the option, a lessee is required to send the bonus payment to the lessor's address via certified mail and file an affidavit of lease extension with the county clerk. A lessor is playing with fire if they do not accept the certified mail in order to claim that their bonus was never paid.

What should another company do that would like to buy a lease from a lessor who has a option to extend in their old oil and gas lease that they claim was not exercised? Berlin argues they should do the following to protect themselves:

1. Ask the lessor if they have been contacted by the lessee or its assigns or moved since they signed the lease.
2. Check the records to see if the lessee filed affidavits of extension in the section or the surrounding sections. It would be odd that the lessee would extend some leases, but not others.
3. Request the lessor warrant title to the lease.
4. Require the lessor file an affidavit of non-payment and file the affidavit in front of the new oil and gas lease.

People do weird things when money is involved (and isn't is usually?). As was said in the gun club, "U Signed the M*****f****** Contract." There is no reason to complain (or commit fraud) if the option that you agreed to is exercised. And the company who desires to buy a fresh lease should protect themselves from bad behavior. 

Berlin wrote this post because a loyal reader asked to learn more about the situation. If you have any more Oklahoma oil and gas leasing or mineral rights questions, or would like to sell your Oklahoma royalties or mineral rights, please comment below or drop Berlin a line.

More to follow,

Berlin

Free Rider Problem: Fee Increases at the Oklahoma Corporation Commission

Oklahoma Oil and Gas Interest Owners:

The Oklahoma Corporation Commission (the "OCC") plays a large, but often misunderstood role in the Oklahoma oil and gas industry ecosystem. The OCC is the regulator of almost all (less Osage County) oil and gas production in the state. Jack "Show me the" Money (a name destined for fame on the business desk) at NewsOK wrote a column regarding the proposed fee changes at the OCC.

Malcolm Smith: Never heard him discuss Oklahoma royalties or the free rider problem, but man could he ride.

The processing time for final orders has increased over the past year as activity has increased in the STACK and SCOOP.  This slows down drilling activity in the state. If the OCC did not want to increase fees or negotiate for a larger budget to hire more folks, it would be different than every other government agency since the beginning of time. But, before an increase in fees is implemented, the state should conduct a study on what the different applications actually cost to process. For instance:

"Increasing the permit fee to drill a well. The permitting fee now is $175, regardless of the type of well. The new fees would range from $750 for a vertical well to as much as $3,500 for a multiunit, horizontal well. The commission estimates the cost to process applications currently ranges from $580 to $2,900, depending on the type of well involved."

Instead of "estimates," the OCC should have a dollar figure that represents the cost. And, if in fact a application does cost $2,900 to process, why should the fee be $3,500? Government entities should not be profiting from their operations. If anything, their revenues (i.e. fees and taxes) should cover the marginal cost of administration while the agency should always be attempting to lower their marginal costs.

Applicants and operators bear a majority of the burden of the fees at the OCC. While it is true that the applicant is the reason of the marginal labor expense at the OCC, the "benefits" of regulation accrue to all parties who own an Oklahoma oil and gas interest. One of the purposes of the OCC is to prevent economic waste and to protect correlative rights. While the applicant for an increased density application will have to pay the fee for the time of the clerks, administrative law judges, and commissioners to review, the Oklahoma mineral owners and the working owners in the offset wells are the parties who benefit from the OCC's technical and administrative review of the application. This is an example of a free rider problem. 

The solution to this issue would be some type of split to fund the OCC between both taxpayer dollars and fees from the applicants. Berlin can hears the shouts now "hey Berlin, this is how the OCC is already funded!" And Berlin knows that. She would just appreciate some data and logical reasoning before the public spends even more private dollars.

More to follow,

Berlin

PS: Please contact Berlin if you would like to sell any Oklahoma mineral rights. We pay top dollar to buy Oklahoma oil and gas royalties and will close quickly.

I Thought You Were a Professional?

Oklahoma Minerals Owners,

Berlin was having coffee at the sale barn this week where she ran across an ol' boy named Keith. Keith asked Berlin what she did when she wasn't raising stockers and she mentioned she's a landman. Keith looked a bit perplexed when he said "a landman? I thought you were a professional, like an accountant or doctor or some sh*t."

Sorry to disappoint Keith, both you and daddy wished Berlin was a doctor or some shi*t too. But even landmen can continue to learn. Below are some items that Berlin thought might be of interest to the readers of The Oil Scout. 

Everything from these pipe fences to producing oil and gas from Oklahoma mineral property is going to become more expensive thanks to the new tariffs.

Saturday Assorted Links

Learning How to Learn: A new course from Coursera created by UC San Diego

Never Split the Difference: Negotiations book (recommended, but you can't use what you learn when negotiating the sale of your Oklahoma oil and gas royalty interests to Berlin)

The Tariff Folly: This tax increase on imported aluminum and steel will punish American workers, invite retaliation that will harm U.S. exports, and make everything that is made out of aluminum and steel more expensive (so...,almost everything). Berlin predicts this will negatively affect the Oklahoma oil and gas industry more than the proposed increase in the gross production tax that the OIPA enjoys complaining about.

More to follow,

Berlin

Saturday Night Special

Somebody owns the oil and gas mineral rights beneath Lynyrd Skynyrds' feet.

All,

Nothing significant to report, might as well rock.

More to follow,

Berlin

Buyers of Oklahoma Mineral Rights, a Small Business Enterprise

Oklahoma Royalty Owners,

Tyler Cowen recently posted about the five smallest industries by firm size.

They are: 

Fishing, hunting, trapping: 3.1 workers on average

Building construction: 5.5 workers on average

Real estate: 5.9 workers on average

Funds, trusts, and other financial vehicles: 6 workers on average

Repair and maintenance: 6.1 workers on average

While Berlin doesn't have access to the base data, your author would hazard a guess that most buyers of Oklahoma oil and gas mineral rights are also smaller firms. Most companies who buy Oklahoma royalties are one-two person operations with a couple contractors on call to assist with title due diligence. If you are interested in selling your mineral rights and royalties, please call Berlin at 918.984.1645 to receive an offer today.

More to follow,

Berlin

Have you given up on this project?

Just a couple of war dogs, Amos Tversky and Daniel Kahneman toast to their partnership in the 1970s.  Courtesy of Barbara Tversky

Oklahoma Mineral Owners,

Have you ever tried to contact a company landman or lease buyer and never hear back from them? Of course, your answer is "yes." I recommend you email them the following..."have you given up on this <project/lease/trade?" This phrase triggers an immediate reaction in the recipient. Research has shown that loss aversion drives action more than the desire for gain. Or, call Berlin at 918.984.1645 if you would like to sell your oil and gas minerals. We will always answer and listen to your initial offer. What other negotiation tactics have you found to be the most useful?

More to follow,

Berlin

Coal County SITREP

Oklahoma Oil and Gas Mineral Owners,

The Arkoma Basin has been playing second fiddle to the STACK for some time now, but the sleeping gas giant appears to be rubbing the sleep from its eyes. Leasing and transaction activity is accelerating in Coal County, Oklahoma. In the last twelve months, there have been 1739 oil and gas leases filed of record in Coalgate by numerous operators and brokers

There have been five companies in the past year who have been granted Pooling Orders in Coal County by the Oklahoma Corporation Commission. For this discussion, Pooling Orders will be our metric to measure presence and activity level in Coal County. The Companies and the number of Pooling Orders issued are detailed on the chart below.

Company	Number of Pooling Orders
Bravo Arkoma, LLC	9
Canyon Creek Energy Operating, LLC	7
Pablo Energy, LLC	6
Newfield Exploration Mid-Continent, Inc.	3
BP America Production Company	1

The chart deserves a bit more analysis. With its enormous legacy position from the Amoco days, it is not surprising to see some activity from BP. With a market capitalization of $100b, I’m not sure what moves the needle for BP, but I don’t think it is a Hunton/Sylvan test in Coal County. Bravo and Canyon Creek are the two operators to watch. With Pooling Orders covering from the Hartshorne to the Arbuckle, it will be interesting to observe how their positions develop. It appears from the 1002As that have been filed, Bravo is exploiting the Woodford while Canyon Creek is exploiting the Cromwell and Woodford.

Title is just nasty in the Arkoma and Coal County is no exception. Minerals tracts can be cut 100 ways. The only consolation is that most of the historical production has been spaced on 640 acres which does make the held-by-production title work a bit easier in contrast to the Golden Trend. Remember to contact Berlin, if you are wanting to buy mineral rights or sell mineral rights in Oklahoma, specifically Coal County. Standby for further reporting on developments in the Arkoma.

More to follow,

Berlin

Oklahoma Energy Jobs Act of 2017

(This post originally appeared on www.oklahomaminerals.com on April 19, 2017)

All,

House Bill 1613 and Senate Bill 284, together known as the The Oklahoma Energy Jobs Act of 2017 (“OEJA”), were introduced on January 18, 2017 and January 19, 2017, respectively. The intent of the proposed legislation is to modify the 2011 Shale Reservoir Development Act (“SRDA”).

The SRDA provided two new tools for the development of shale reservoirs. Tool one allows the drilling of a horizontal well in shale reservoirs across existing unit boundaries (i.e. the drilling of a multi-unit well) and provisions to distribute costs, production, and proceeds to each of the affected units. Tool two, which sofar has been seldom utilized, allows for the unitization of a shale reservoir.

The end state of the OEJA is to allow operators to drill multi-unit horizontal wells in all formations. Currently, under the SRDA, operators are only allowed to drill multi-unit horizontal wells in shale formations. The mechanism to achieve the proposed end state is to redefine the definition of “targeted reservoir” from a shale to include any formation potentially suited for development through a horizontal well.

Horizontal operators are clearly in support of this legislation. By drilling multi-unit wells, the operator and its partners can realize huge savings. Your columnist would be speaking out of school if he opined on the specifics of the drilling and completions disciplines, but for example, if an AFE for a one mile lateral ia $5m, then is would cost an operator $15m to develop three sections. If an AFE for a 1.5 mile lateral is 6.5m, then it would only cost $13m to develop the three sections. These savings are partly realized through the efficiencies of pad drilling, decreased rig and other rental costs and production facility centralization.

Vertical operators are opposed to this legislation. The differences of opinion between horizontal and vertical operators have caused a rift in the Oklahoma Independent Petroleum Association, the largest lobbying organization for the oil and gas industry in the state. Vertical operators are concerned that increased horizontal activity in the formations in which their wells currently produce will have a large impact on their operations. Drilling and completions undoubtedly may affect the production and future production of producing wellbores and reservoirs.

With current activity in the state so dramatically tilted in the direction of horizontal drilling, your columnist believes the OEJA will be enacted over the objections of the vertical operators, but the Oklahoma Corporation Commission is likely attempt to protect the rights of the vertical operator through administrative rulings as a type of consolation prize. A student of economics would argue that this is clearly an example of what Schumpeter coined, “creative destruction,” and an anticipated consequence of technological innovation and progress.

More to follow,

Berlin

Canadian County, Oklahoma SITREP

Oklahoma Oil and Gas Mineral Owners,

Because of its premier position in the heart of the STACK, leasing and transaction activity has not slowed in Canadian County, Oklahoma in 2016 despite the lower oil prices. To date in 2016, there have been 1014 oil and gas leases filed of record in El Reno by numerous operators and brokers. Because bonuses have remained competitive, the most important question that you should ask before leasing is how likely the lessee is to drill your lease during the primary term. The path to generational wealth is not periodic lease bonus payments, but the passive cash flows generated by regular royalty checks. The lessee should be a stable company focused in Oklahoma and not a fly-by-night lease flipper.

That being said, there have been only 8 companies this year who have been granted Pooling Orders in Canadian County by the Oklahoma Corporation Commission. For this discussion, Pooling Orders will be our metric to measure presence and activity level in Canadian County. The Companies and the number of Pooling Orders issued are detailed on the chart below.

Company	Number of Pooling Orders
Chaparral Energy, LLC	2
Cimarex Energy Co.	5
Citizen Energy II, LLC	6
Devon Energy Production Company	3
Felix Energy, LLC	5
Newfield Exploration Mid-Continent, Inc.	14
Payrock Energy, LLC	14
SCOOP Energy Company, LLC	8

The chart deserves a bit more analysis. Chaparral Energy, LLC declared bankruptcy which we have previously written about. SCOOP Energy Company, LLC is affiliated with American Energy Partners. As it was announced here in the Wall Street Journal, that all non-spun off entities will shut down. As SCOOP Energy Company has not been spun off, it is expected to shut down this summer. As an Oklahoma Oil and Gas Mineral Owner, I would not expect Chaparral or SCOOP to drill any wells in the foreseeable future.

Felix Energy was purchased by Devon Energy so Felix can also be struck from the list. Some in the industry say that Devon got out a bit over their skis with the purchase price and it might affect their ability to fully develop the acreage. Cimarex, the plodding tortoise of the group, moves extremely slowly. Their insistence on risk mitigation severely limits the amounts of exploratory drilling they are willing to conduct. It was well detailed in the 2016 company guidance presentation that they will focus on in-fill drilling in their East Cana field.

Newfield Exploration announced that it is closing its Tulsa, Oklahoma office this summer. With its staff mired in the morass of the Houston metro-plex, the company will be less competitive in the Mid-Continent region and will continually find excuses in the future to commit capital to other projects.

With those dominoes down, it appears that Payrock Energy, LLC and Citizen Energy II, LLC will be the development leaders going forward in Canadian County in 2016. Both appear to be accelerating their drilling to take advantage of the publicly traded companies hesitation in committing drilling dollars and other finite resources to the development of Canadian County, Oklahoma.

It's worth it as an Oklahoma Oil and Gas Mineral Rights owner to consider your lessee's plans for development before executing your oil and gas lease.

More to follow,

Berlin

Shut In Royalty Payments

Oklahoma Mineral Rights Owners,

Most oil and gas leases contain what is commonly known as a shut-in royalty clause.  The clause developed over the years to mitigate the harshness of the automatic termination rule.  Under the automatic termination rule, an oil and gas lease will generally terminate any time after expiration of the primary term unless there is a well on the leased premises producing gas “in paying quantities.”  This rule, in a majority of jurisdictions, requires actual production and marketing of natural gas.  Unlike oil, natural gas cannot be produced and then stored or transported in railroad cars or tank trucks – post-production facilities such as pipelines, compressors and dehydrators are generally required to process and deliver the gas to market.  In such circumstances where a gas well has been completed, but no market exists for the gas, the shut-in clause enables a lessee to keep the non-producing lease in force by the payment of the shut-in royalty.  Such payment serves as “constructive production” and avoids application of the automatic termination rule.

A standard shut in royalty is usually a nominal $1.00 per acre per year. If there are no additional provisions to address the shut in, then the operator can hold the lease if he continues to pay the shut in royalty. When negotiating the oil and gas lease, the lessor should ask for a provision such as the following:

"After the end of the primary term, this lease may not be maintained in force solely by reason of the shut in royalty payments, as provided heretofore, for any one shut in period of more than three (3) years, or from time to time, for shorter periods which exceed three (3) cumulative years."

Any questions regarding shut in royalty payments for the Oklahoma Oil and Gas lessor? More to follow.

BR

Option to Extend Primary Term in Oklahoma Oil and Gas Leases

Oklahoma Mineral Rights Owners,

One of the most common provisions an oil company landman will try to negotiate is an option for the oil company to extend the primary term of the lease. For most oil and gas leases in Oklahoma, the primary term of the lease is three years. The landman will ask for an option to extend the primary term of the lease for two years. This oil and gas lease is sometimes referred to as a 3 + 2 lease.

While a 3 + 2 oil and gas lease is more favorable to the Oklahoma mineral rights owner than a oil and gas lease with a 5 year primary term, it is still worth the mineral owner's time to try to negotiate it out of the oil and gas lease and here's why:

• If the area turns into the next SCOOP (South Central Oklahoma Oil Province...thanks Harold Hamm...) then the bonus amounts per acre will increase substantially and the Oklahoma mineral rights owner will most likely be locked into a reduced bonus amount that was negotiated several years prior.
• If the area turns out to be a bust (think Mississippi Lime...) then the oil company would let the option expire and if they were going to re-lease, would negotiate a lower bonus amount. This leaves the Oklahoma mineral rights owner in no better shape than if they didn't have an option.

If a landman won't strike the option, request that the option to extend be priced at 125%-150% of the current lease bonus. Most will hem and haw, but will usually concede that point.

More to follow.

BR

Forced Pooling In Oklahoma

Oklahoma Oil and Gas Mineral and Royaty Owners,

Pooling is the process of combining the interests of two or more tracts in the same spacing unit. The area is called a pool, or a unit. Pooling provides benefits to the operator by combining all owners’ interests in one common pool under one drilling and spacing unit and utilizing one or more common geological formations, commonly referred to as a “common sources of supply” by the Oklahoma Corporation Commission (“OCC”). The primary purpose of pooling is to develop and operate a given formation in order to recover the greatest amount of hydrocarbons that can reasonably be produced, prevent the drilling of unecessary wells, and also to achieve equity among the interest owners by permitting each owner to recover a fair share of hydrocarbons therefrom. There are several types of pooled units, but for today's discusssion only voluntary pooled units and forced pooled units will be discussed.

Owners wishing to propose a well must secure the commitment of other owners in the drilling and spacing unit.  The proposing party, at minimum, should send a well proposal to all other owners in the unit. Most drilling and spacing units for horizontal wells comprise an area of 640 acres or one section. Since Oklahoma minerals rights are often bought and sold, this could mean that there are hundreds of owners in just one section. Closing a deal or even locating all the owners is very difficult. Therefore, the proposing party must file a pooling application through the OCC in order to “force” or secure commitment from all parties. This process is called forced pooling in Oklahoma.  

The pooling application will provide notice to all of the unleased mineral owners or all lessees who will be listed as respondents on Exhibit “A” of the application. The pooling notice is mailed to all respondents having the right to drill and/or participate in the well. The notice sets a time and place for the upcoming hearing and allows any respondent to be present in order to protect his interest.

At the hearing, the landman who attempted to negotiate with all the owners in the unit, will testify under oath that proper notice was given to each of the respondents and also that a good faith effort was made to come to terms with each respondent listed on Exhibit “A”. Testimony by the landman will include the fair market value of the mineral interests in the section and the surrounding eight contiguous sections ("the nine spot"), as it relates to lease bonuses paid and royalties offered within the last year; and may include any competitive single section trades such as farmout agreements or term assignments made in the same area.

After the hearing, the judge will decide whether to issue a pooling order or not.  If a pooling order is issued, the respondent(s) will have 20 days from the issuance of the order to make an election on the options provided. A pooling order typically provides for one of the following two options:

1.  Participate in the well and pay the owners' proportionate share of costs.

2.  Select one of the options presented by the landman. There will usually be two combinations of a cash bonus per net mineral acre (nma) and a royalty. For example, one could selected $200/nma and a 1/8th royalty or $100/nma and a 3/16th royalty.

It is important to note that an owner's selection will govern his unit rights for as long as that unit is producing. There should be provisions in the pooling order to govern subsequent wells. For example, if an owner elects not to partiticpate in the intial well and instead selects the 3/16th royalty, he will not have the option to participate in subsequent wells.

This process is beneficial to the operator as the OCC causes all undecided landowners to make elections pursuant to the pooling order. Oklahoma’s forced pooling process benefits operators, working interest partners and mineral interest owners. It stimulates a competitive market for development of oil and gas, which results in revenues for investors and royalty owners.

There is no minimum ownership percentage to file to pool a section. Even an owner with a small stake in the unit can apply to pool the other owners to force the drilling of the well. This is important because it can push legacy operators out of the way who are not wanting to spend the capital to develop the newly found horizontal horizons.

Most poolings are in force for a year and if the initial well is not spud within this time frame than the order will expire as to the formations that were pooled.

Any questions? More to follow.

BR

Oklahoma's Surface Damage Act

Oklahoma Oil and Gas Mineral Owners AND Surface Owners,

What is the Oklahoma Surface Damage Act? The Surface Damage Act requires oil companies to negotiate in good faith with landowners to determine and pay for the amount of damage that will occur to property as a result of oil and gas operations. The damages considered are listed below. If these negotiations are not successful, the Surface Damage Act provides a procedure for determining those damages by an appraisal and if necessary, by jury trial.

The Surface Damage Act applies to the operator and the surface owner (not lessee) of the property where oil and gas operations will occur. The Act does not apply to damages caused by the exploration for oil and gas using seismic instruments.  The amount of damages to be paid is the difference in the fair market value of the entire tract of property before the oil and gas operations on the property, and the fair market value of the entire tract of property after the oil and gas operations are completed. 

The Oklahoma Supreme Court has noted that the following items are some of the factors that may be considered in calculating the damages:

• The location or site of the drilling operations.  
• The quality and value of the land used or disturbed by said drilling operations.
• Incidental features resulting from said drilling operations which may affect convenient use and further enjoyment.
• Inconvenience suffered in actual use of the land by the operator.
• Whether the damages, if any, are temporary or permanent in nature.
• Changes in physical condition of the tract.
• Irregularity of shape and reduction, or denial of access.
• The destruction, if any, of native grasses, and/or growing crops, if any, caused by drilling operations.

Before an operator enters the property, it must provide notice to the surface owner of its intent to drill. This notice must be sent by certified mail. The letter must include (1) the proposed location of the well, and (2) the approximate date that drilling operations are scheduled to start. Once this notice has been delivered, the operator has five days to start “good faith” negotiations with the surface owner. If the parties can agree to the amount of surface damages and write a damages contract, then the operator can enter the site and start drilling. Once this amount is paid, the Surface Damages Act has been fulfilled.

If the operator and surface owner cannot reach an agreement, a new procedure begins. First, the operator must file a bond with the Oklahoma Secretary of State. This bond is meant to ensure the payment of whatever damages may be determined. Second, the operator must file a petition in the district court for the county in which the proposed well will be located. This petition asks the court to appoint appraisers to determine the surface damages to the property. If an operator properly completes these steps, it can enter the property even without the permission of the surface owner; however, the operator cannot enter the property until these steps are satisfied.

If the operator asks the district court for the appointment of appraisers, the surface owner must be given notice of the petition within ten days. Once the surface owner has received his or her notice, the parties have 20 days to choose their appraisers. One appraiser is chosen by the surface owner, and one chosen by the operator. These two appraisers choose another appraiser, for a total of three.

Once the appraisers have been appointed and sworn in by the court, they have 30 days to inspect the property, confer to estimate the amount of damages, and submit a written report to the district court, which is then forwarded by the court to the surface owner and the operator. Once the report is filed, the surface owner and operator have three options from which to choose. First, if the parties agree to the appraised amount of damages, the damages can be paid to the surface owner by the operator, and the matter is closed. Second, either party can, within 30 days of the filing of the report, file an exception with the court stating the party believes the appraisal is inaccurate. If either party chooses this option, the court will review the appraisal and either confirm it, reject it, modify it, or ask for a new appraisal. Third, either party can, within 60 days of the filing of the report, demand a jury trial to determine the amount of damages.

It should be noted here that the oil and gas operations at the site in question may continue even if an exception or demand for jury trial is made, so long as the operator posts an amount equal to the appraised damages with the court clerk. 

Any questions? More to follow.

BR

The Public Land Survey System (PLSS) in Oklahoma

Oklahoma Mineral Owners,

One of the very first questions that a mineral owner will be asked if he wants to sell his Oklahoma mineral rights or oil and gas royalties is the legal description of where the mineral rights are located.

Throughout the history of the United States there have been various ways of surveying public land. Oklahoma, just like most lands west of the Mississippi, was surveyed using the Public Land Survey System or PLSS for short. It is a way of subdividing and describing land.

The PLSS typically divides land into six mile squares called Townships. Townships are further subdivided into one mile squares called Sections. Sections can be further subdivided in various divisions such as into quarter sections or quarter-quarter sections.

The PLSS actually consists of a series of separate surveys. Surveys begin at an initial point and then the townships are surveyed from that point. The North-South line that runs through that point is called the Principal Meridian and the East-West line that runs through the point is called the base line.

Each township is identified with a township and range designation. Township designations indicated the location North or South of the Baseline and Range designations indicated the location East or West of the Principal Meridian. For example, Township 11 North, Range 8 West means that it is the 11th township North of the baseline and the 8th township West of the Principal Meridian. To identify a specific section in the township, one will call the section number before the township. For example, Section 1-Township 11 North-Range 8 West.

As one can see in the photo above, the sections begin With Section 1 in the North East corner for each township and run across and then down through Section 36. One will also notice, that Oklahoma has two Principal Meridians. The Indian Meridian currently lies 6 six miles west of Davis, Oklahoma. The Cimarron Meridian lies in Cimarron County, Oklahoma, just west of Felt. Only lands in the Oklahoma Panhandle were surveyed by the Cimarron Meridian.

More to follow.

BR

The Anadarko Basin

Oklahoma Oil and Gas Royalty Owners,

The Anadarko Basin is a a geologic depositional and structural basin centered in the western part of Oklahoma and the Texas panhandle. The Basin underlies nearly 50,000 square miles and contains some of the most prolific natural gas fields in the country such as the Union City (Tigers) Field and the Elk City (Elks, obviously) Field.

Attached is an excellent presentation from the Oklahoma Geologic Society that explains the details. 

More to follow.

BR