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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Ken Robbins who wrote (27360)	8/7/1998 11:07:00 PM
From: Aggie	Respond to of 95453

Off Topic Ken, hello I'm not sure I understand your question. Your friend, as a landholder, is entitled to a revenue interest in the well, but should not in any way be liable for operating costs and liabilities. What state is this in? If, for example, this is Texas, he would most likely be entitled to 1/6-1/8 revenue interest. This is cream, off the top, and will be payable as soon as the well begins producing the hydrocarbons (if it's a standard kind of lease agreement). Does your friend own a "revenue" or "operating" interest (which one)? It's generally pretty unusual for a landowner to be providing operating capital for an oil company, and I cannot see any way that he would be obligated to provide it against his will, unless it was a prior arrangement or deal. It follows from this that he cannot be responsible for the cost of the original well that blew out. Did the 160 acre landowner receive his royalties for the hydrocarbons produced while the well blew out? Regards, Aggie.

To: Ken Robbins who wrote (27360)	8/7/1998 11:41:00 PM
From: Badfinger	Respond to of 95453

Have your friend get a good land Attorney. Many of the smaller operators will pull this scam to get others to pay for these types of problems. Not necessarily a bad deal in this case. They can and will most likely be granted the larger acres for the well because of the larger volumes associated with the blow. Often times state agencies will request that smaller operators inform them who will pay for the clean-up etc. However, your friend has no obligations until he signs-up and agrees to help. If the geologists can demonstrate that some of the drainage is coming from his lease it might be in his interest to contribute as he maybe able to negotiate a larger % of production if he helps shoulder some of the well costs. Work up some economics based on a hard look at logs, off-set data, and offset potential if any exisits. Get a second geological opinion also. Good luck!