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Oil/Gas/What should I do abt Oil Co Oversight


EOG just sent me an OGL for 1.0 acre in Montague Co Tx that I never signed but have been receiving royalty on as they had me sign the DO back in June because I did sign two other OGLs for the pooled unit. So since its producing shouldnt I get more than a $50 bonus since I got a lot more on the others when they werent producing? Also someone said that now I should ask for a portion of the revenues.

You claim that you have been receiving royalty attributable to the 1-acre tract even though you have not signed a lease.  How do you know this?  You say you signed two other leases that you know are included in the pooled unit--that is why you are currently receiving royalty payments.  I question whether or not you are being paid royalty under a lease you haven't signed yet.  The division order you signed definitely would have included the lands from the two leases you signed, but I doubt it includes this 1-acre tract.

The most important piece of information I think you need to know is that your leverage here depends on the location of the 1-acre tract in relation to the wellbore path.  I suspect that this well is a horizontal well, not a vertical or directional.  

Is your 1-acre tract inside the unit boundary but outside the drillsite tract/path?  If yes, then if you do not sign the lease EOG has no duty to ever pay you any revenues attributable to your 1-acre tract because without a lease you have not agreed to be "pooled" and therefore your 1-acre tract is considered to be non-producing.

Is your 1-acre tract inside the unit boundary AND inside the drillsite tract/path?  If yes, only then could you maybe have some leverage. If you do not sign the lease you must be paid 100% of the revenues allocated to the length of the horizontal wellbore crossing your 1-acre tract, but only if there is at least one perforation in that tiny section of wellbore.  If there is no perforation, it can be argued that there is no proven drainage from your 1-acre tract.

In closing, I would be very surprised if your 1-acre tract is inside the drillsite area. EOG is very careful in their drillsite clearance procedures, and to overlook even 1 acre would be very uncharacteristic of them. As for the $50 they are offering you for the lease, it is a small lump sum that they very likely will not be willing to increase, because the proportion of 1 acre to the total acres in a pooled unit is going to be very small.  And remember, if your lease is outside the drillsite and you refuse to sign, your 1 acre cannot be considered pooled and therefore, you will not be paid any production revenues at all.


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Marsha Breazeale, M.Ed., CDOA, CPLTA


All questions regarding division orders; ownership decimal calculations; title ownership and payer record changes (testate/intestate inheritance; deed; assignment; court order); oil and gas lease analysis for record-keeping and purposes of payment by operator or payer; pooling, horizontal wells, horizontal well allocation units; unclaimed property reporting; royalty owner relations questions. All questions concerning administration of surface land contracts and payment questions, such as for Surface Right-of-Way, Sub-Surface Right-of-Way, Easement, Surface Use Agreement. All questions regarding industry-standard and company-specific policies that affect land owners.


Sr. Staff Division Order Analyst. Certified Division Order Analyst (CDOA, National Association of Division Order Analysts) and Certified Lease Analyst (CPLTA, National Association of Professional Lease and Title Analysts) with 35 years of experience as a combination division order analyst and lease analyst in exploration and production in the oil and gas industry.

National Assoc. of Division Order Analysts (NADOA), National Association of Division Order Analysts (NALTA), American Association of Professional Landmen (AAPL), American Society of Trainers and Developers (ASTD)

"How an Oil & Gas Exploration & Production Company Operates" and "Principles of Oil & Gas Lease Analysis: Standard Clauses", Oil Patch Press; Articles in NADOA Magazine; LandFocus EDU Professional Training Manuals

Education/Credentials Management from Our Lady of the Lake University in San Antonio; M.Ed. in Instructional Design from WGU Texas.

Past/Present Clients
Past 15 years: GeoSouthern Energy Corporation; Contango Oil Co./Crimson Exploration & Operating Inc.; Apache Corporation; BP America; Marathon Oil; Newfield Exploration

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