FAQs
When is my first payment due?
Week beginning March 4
How much will I owe?
Closing will consist of each owner’s payment for their proportionate share of:
1) The cash value of the lease (ie $250k), an asset to be assigned to each owner.
2) The cost of pipeline repair (~$301k).
Drilling costs (~$468k) will be collected using a separate AFE once we’ve signed a drilling contract (no sooner than mid-March).
The completion AFE payment (~$322k) will be made after the completion election (after the well is logged).
Will there be other costs?
We’ve worked hard to accurately and conservatively develop an AFE (ie budget). We don’t anticipate any near-term costs beyond the drilling and completion numbers we’ve shared. Operating expenses will be “netted” from each month’s revenue.
A few things to keep in mind:
1) Things do break, and field operations are occasionally required, for example:
– valve replacement ($1,000)
– swabbing (ie removing fluid from) a well ($3,000)
– road repair ($2,000)
Such costs should be easily recovered (ie netted) out of revenue.
2) The conveyance that assigns a portion of the lease to every owner subjects them to their proportionate share of all costs, including the eventual plugging and abandonment (“P&A”) of any well(s). Such activities will be planned and communicated to all parties with significant lead time.
3) Participation also includes future developments, such as additional exploratory and/or injection wells as deemed prudent by the operator. These are optional for the owners.
4) Adherence to any AFEs/budgets is a goal, not a guarantee.
When can I expect revenue?
Oil is paid on a one-month lag, gas on two.
Assuming we spud in March, first sales would likely occur in May (maybe April), and owner payments would begin the following month.
What is a JIB?
JIB stands for “joint interest billing.” It reflects the owner-level allocation of all lease- and well-level expenses borne by the operator and then billed to its working interest partners.
How deep is too deep?
The leased rights to develop the Yegua expire on February 12, 2024. Drilling past the lower Vicksburg and into the next formation – specifically, “below the stratigraphic equivalent of the base of the Vicksburg formation as seen at a depth of 9,247 feet subsurface” – would be a form of trespass.