At CEFM, we believe in making oil well ownership easy. Drilling a well from start to finish is extremely complex. Most investors do not have the time or connections to find, develop, drill, and manage an oil well. We use our resources to allow investors to enjoy the benefits of owning a well without the hassle of running the business. 

Oil Well Lifecycle

1. Review Prospect Data

Reviewing an oil well prospect involves analyzing geological, geophysical, and engineering data to assess the potential for oil and gas extraction. Geologists examine rock formations, seismic surveys, and well logs, while engineers evaluate reservoir characteristics and production estimates. The process aims to identify viable drilling locations and estimate the economic viability of extracting hydrocarbons from the prospective site.

2. Prepare Geology & Maps

Preparing geology maps for drilling an oil well involves integrating geological data to create detailed maps that guide the drilling process. Geologists analyze subsurface structures, rock formations, and seismic data to identify potential reservoirs. They then compile this information into maps, highlighting favorable drilling locations, geological formations, and potential hazards. These maps serve as crucial tools for decision-making, helping geologists and drilling engineers optimize well placement and enhance the chances of successful oil extraction.

3. Check Courthouse

Checking the courthouse before drilling an oil well involves a legal due diligence process. Landmen or legal professionals examine public records at the courthouse to verify land ownership, lease agreements, and any existing claims or encumbrances on the property. This step ensures that the drilling operation complies with regulations, secures necessary permissions, and avoids legal conflicts. The courthouse check is essential for obtaining a clear understanding of the legal status of the land and minimizing potential legal challenges during and after drilling.

4. Negotiate Lease

Negotiating a lease before drilling an oil well involves discussions between the oil company and the landowner to determine terms and conditions. This process includes agreeing on factors such as royalty rates, lease duration, and any bonus payments. Legal experts may be involved to draft a comprehensive lease agreement that outlines the rights and responsibilities of both parties. Successful negotiations result in a mutually beneficial contract, allowing the oil company the right to explore and extract resources while providing compensation and protections for the landowner

5. Check Title

Checking a title before drilling an oil well involves a thorough examination of legal records to verify ownership and rights to the mineral resources beneath the land. Landmen or legal professionals review deeds, contracts, and other documents at the courthouse to ensure clear and unencumbered title. This process helps identify any potential legal issues or conflicting claims that could impact the drilling operation. Clearing the title is crucial for obtaining the necessary permissions and minimizing legal risks associated with oil & gas exploration.

6. Pay Lease

Paying a lease before drilling an oil well involves the oil company fulfilling financial obligations to the landowner as stipulated in the lease agreement. This typically includes bonus payments, which are upfront sums paid to secure drilling rights, and ongoing royalty payments, which are a percentage of the extracted resources’ value. Timely and accurate payments are crucial for maintaining a positive working relationship between the parties and ensuring compliance with the terms outlined in the lease.

7. Engineering & Planning

Engineering and planning before drilling an oil well involve a comprehensive process of designing and organizing the drilling operation. Engineers analyze geological data to optimize well placement, plan drilling techniques, and design the wellbore. They consider factors such as reservoir characteristics, drilling equipment, and safety measures. The planning phase includes developing a detailed timeline, cost estimates, and risk assessments. This meticulous preparation ensures the efficiency and success of the drilling process, addressing technical challenges and adhering to environmental and safety standards.

8. Obtain Permits

Obtaining permits before drilling an oil well involves navigating regulatory processes to secure government approval for the exploration and extraction activities. This includes submitting detailed applications that outline the project’s environmental impact, safety measures, and compliance with local regulations. The permitting process may involve assessments from environmental agencies and public consultations. Successful completion of this process ensures that the drilling operation adheres to legal and environmental standards, allowing the oil company to proceed with the project in a responsible and compliant manner

9. Prepare Private Placement

Preparing a private placement before drilling an oil well involves crafting a detailed investment offering for a select group of private investors. This process includes creating a prospectus or memorandum outlining the project’s details, financial projections, risks, and potential returns. The oil company aims to attract funding from private investors to support drilling activities. Legal and financial experts may be involved in ensuring compliance with securities regulations and structuring the offering. Successful preparation of a private placement positions the company to secure the necessary capital from private sources to fund the drilling project.

10. Investment Made In Well

Investing money before drilling an oil well involves allocating capital to finance various aspects of the drilling operation. Investors contribute funds to support activities such as geological surveys, permitting, equipment acquisition, and drilling operations. The goal is to secure a return on investment through the successful extraction and sale of oil or gas. Investors assess the project’s viability, potential risks, and expected returns before committing capital. The funds invested are crucial for covering the upfront costs associated with exploring and tapping into potential oil reserves.

11. Pay Surface Damages

Paying for surface damages after drilling an oil well involves compensating landowners for any impact or disturbance caused to the surface of the land during the drilling process. This compensation is typically outlined in the lease agreement and may cover issues such as disruption to agriculture, landscaping, or any structural damages. The oil company assesses and addresses the damages, negotiating fair compensation with the landowner to restore the affected areas and mitigate any adverse effects resulting from the drilling operation.

12. Stake Location

Staking a location before drilling an oil well involves physically marking the designated drilling site on the ground. Surveyors or land professionals place markers or stakes at key points, defining the boundaries and center of the proposed well location. This on-site marking ensures precise alignment with geological and engineering considerations, facilitating accurate well placement during the drilling process. Staking is a crucial step to translate geological and engineering data into actionable coordinates for the drilling team.

13. Prepare Location

Preparing a location before drilling an oil well involves clearing and leveling the drill site, setting up access roads, and installing necessary infrastructure such as power and water supplies. This process ensures a safe and efficient environment for the drilling operations. It includes constructing a drilling pad, setting up containment systems for managing drilling fluids, and ensuring environmental protection measures are in place. Proper site preparation is essential for minimizing operational disruptions and adhering to safety and regulatory standards.

14. Drill Well

Operators manage the drilling process by assembling the rig and equipment, initiating the starter hole, and progressively drilling to the target depth using drilling mud. They run logging tools to collect geological data, continuously monitor drilling parameters, and make real-time adjustments based on conditions. Operators address issues promptly, coordinate with the drilling crew, and ensure strict adherence to safety protocols and regulations to protect personnel and the environment.

15. Log The Well

Logging an oil well after drilling involves lowering specialized tools into the wellbore to collect detailed data on the geological formations encountered. This data includes information on rock types, porosity, fluid content, and other properties critical for assessing the well’s potential productivity. The results help determine the next steps in the well completion and production process.

16. Run Casing & Cement

Running casing and cement into an oil well after drilling involves inserting steel pipes (casing) into the wellbore and then pumping cement around the casing to secure it in place. This process stabilizes the wellbore, prevents collapse, and isolates different underground layers to prevent fluid migration, ensuring the integrity and safety of the well.

17. Perforate Casing

Once an oil well is drilled, casing perforation is performed using a perforating gun, which is lowered into the well to the desired depth. The perforating gun is equipped with explosive charges that, when detonated, create small holes through the steel casing, cement, and into the surrounding rock formation. These perforations establish a flow path for oil and gas to enter the wellbore, enabling extraction. This process is carefully controlled and monitored to ensure precision and safety

18. Stimulate Well

Stimulating an oil well after drilling involves enhancing the flow of oil and gas from the reservoir into the wellbore. This can include hydraulic fracturing, acidizing, nitrogen, and water injection. These techniques increase the well’s productivity by allowing hydrocarbons to flow more freely.

19. Fracture (If Needed)

Fracturing an oil well after drilling involves injecting a high-pressure fluid mixture, typically water, sand, and chemicals, into the wellbore. This fluid creates fractures in the surrounding rock formation, allowing oil and gas to flow more freely into the well. The fractures are propped open by the sand, enhancing permeability and increasing production rates.

20. Test Well

Testing an oil well after drilling involves assessing its productivity and performance. This typically includes conducting flow tests to measure the rate and volume of oil and gas production, as well as analyzing the quality of the extracted hydrocarbons. Additionally, pressure tests may be conducted to evaluate reservoir pressure and assess well integrity. These tests help determine the well’s potential for commercial production and inform decisions regarding further development and optimization strategies

21. Set Production Facilities

Setting production facilities for an oil or gas well after drilling involves installing equipment and infrastructure to extract, process, and transport hydrocarbons. This includes installing wellheads, separators, pumps, and pipelines to capture and separate oil, gas, and water. Additionally, facilities such as storage tanks and metering systems may be installed to store and measure the extracted resources. The production facilities are designed to maximize efficiency, safety, and environmental compliance, enabling the smooth operation of the well and the transportation of produced hydrocarbons to market.

22. Set Infrastructure

Setting infrastructure for an oil or gas well after drilling involves installing essential equipment and facilities to enable extraction and transportation of hydrocarbons. This includes setting up wellheads, pipelines, storage tanks, and processing facilities. Additionally, infrastructure for power supply, access roads, and safety measures may be established. The goal is to create a functional and efficient system that facilitates the extraction, processing, and transportation of oil or gas from the well to market while ensuring compliance with regulations and environmental standards.

23. File Paperwork

Filing paperwork for an oil or gas well after drilling and completion involves submitting necessary documents and permits to regulatory agencies. This typically includes reports on well construction, completion, and production, as well as environmental impact assessments and safety certifications. The paperwork ensures compliance with regulations and allows for the monitoring and oversight of the well’s operations.

24. Begin Oil & Gas Sales

Selling oil or gas from a producing well involves negotiating contracts with buyers, arranging transportation logistics, and ensuring compliance with regulatory requirements. This process includes pricing negotiations, scheduling deliveries, and coordinating with pipeline operators or tanker companies for transportation. Additionally, accurate measurement and quality control procedures are implemented to ensure the smooth sale and transfer of hydrocarbons to customers.

25. Bring Abstracts Up To Date

Bringing abstracts up to date after drilling and completion involves updating legal records and documentation related to the oil or gas well. This includes updating land ownership information, lease agreements, and any encumbrances or rights associated with the property. The process ensures that the legal status of the well is accurately reflected, providing clarity and transparency for all parties involved.

26. Attorney Prepares Title Opinion

Attorneys prepare a title opinion after drilling and completion of an oil well by reviewing legal documents and land records to assess ownership rights and any potential title defects. This involves analyzing deeds, leases, contracts, and other documents to provide an opinion on the validity and marketability of the title, ensuring clarity for ownership and transfer of the property.

27. Forward Title Opinion to Purchaser

Forwarding a title opinion to a purchaser after drilling and completion of an oil well involves transmitting the attorney’s findings and assessment of the property’s title. This includes providing a comprehensive report detailing ownership rights, any encumbrances, and potential title defects discovered during the review process. The goal is to ensure transparency and clarity for the purchaser regarding the legal status of the property and any associated risks.

28. Purchaser Prepares Division Order.

Preparing a division order after drilling and completion of an oil well involves the purchaser compiling legal and production data to allocate revenue interests among the various interest owners. This includes confirming ownership percentages, verifying production volumes, and calculating revenue distributions based on the terms of the lease agreements and applicable regulations. The division order serves as a formal agreement outlining each owner’s share of the proceeds from oil and gas sales.

29. Division Order Sent to Oil Company

Sending a division order to the oil company after drilling and completion of an oil well involves the purchaser officially notifying the company of the revenue interests allocated to each interest owner. This includes providing the details of ownership percentages, production volumes, and revenue distributions outlined in the division order. The oil company uses this information to accurately allocate and distribute proceeds from oil and gas sales to the respective interest owners according to the terms of the agreement.

30. Oil Company Signs & Returns

After drilling and completion of an oil well, the oil company reviews the division order received from the purchaser. Once verified for accuracy, the company signs the division order, acknowledging its acceptance of the revenue allocations outlined within. The signed division order is then returned to the purchaser, confirming the agreement and enabling revenue distributions to commence according to the agreed-upon terms.

31. Purchaser Schedules For Payment

For a purchaser to schedule payment by an oil company after oil and gas sales, they provide the necessary documentation, such as invoices or sales agreements, to the company. The oil company then verifies the sales data, calculates the amount owed to the purchaser based on the agreed-upon price and terms, and schedules payment accordingly. This involves issuing a payment statement or remittance advice detailing the amount to be paid and the payment date, ensuring timely settlement of the purchaser’s accounts receivable.

32. Oil Company Receives Payment

Upon oil and gas sales, the purchaser remits payment to the oil company based on the agreed-upon terms and pricing outlined in the sales agreement. The oil company verifies the accuracy of the payment received and reconciles it with the sales data provided. This typically involves recording the payment in their accounting system and updating financial records accordingly.

33. Oil Company Pays Investors

After oil and gas sales, the oil company disburses payments to investors based on their ownership stakes and the revenue generated from sales. This involves calculating each investor’s share of the proceeds, typically outlined in division orders, and issuing payments accordingly. The company ensures accurate and timely compensation to investors, reflecting their entitlement to revenue from oil and gas sales.