This is my first post to the forum. I’ve leased my minerals in the past but I’m still at a very beginners level in understanding. I’ll give a little background information and then ask my questions.
5 years ago I leased to Trailhead for $800/acre and 3/16 royalty for 5 yrs.
November 2023 a lease extend/amend offer was mailed to me. It had two options:
$450/acre bonus and 1/8 royalty for 3 yrs or $300/acre bonus and 3/16 royalty for 3 yrs.
Unfortunatly the envelope with this offer was “misplaced” and I just discovered it this week.
When I contacted the land man, he said that he’d “had to remove those earlier offers”. The current offers are worse than they had been just a few months ago.
I don’t know what’s going on in that area now, but in 2020, I received an email asking me to sign a letter in support them. Here is an excerpt of that email:
“…Trailhead and XTO are jockeying for control of section 19-8S-3E in order to drill. Trailhead and XTO are both proposing a horizontal well in sections 18 and 19…”
My questions are:
Why would the offer worsened in just a few months?
Are there other land men working in that area I should contact and see if they have a better offer?
At our restricted lease hearing in Love County the first rattle out of the trap by our attorney from the Bureau of Indian Affairs was the reason for lowball lease offers was because covid had driven down the value of most everything, especially land values. At the time I held my tongue, but larer I called her on it because there were some other factors in our case that should have driven up the value rather than drive it down which she wasn’t aware of. We managed to get our lease offer doubled. In your case ckvid might be the culprit for low offers but I rather doubt it.
Offers are tied to competition. In general, leasing prices are down in OK in most areas at the moment. I have seen lower leases amounts across many counties this year.
If your name and address are properly filed in the county courthouse, the landmen will start looking for you there. They usually come looking for you and not you looking for them or you may get lowballed. The groups that were leasing nearby were Acoma Energy, Continental Resources, Fortsun Energy, Lance E Jones, NWR Mineral Partners and Trailhead Exploration.
Trailhead drilled the Judge 1-6H7X18 in 2021. It is just to the north of you. It has an estimated ultimate recoverable of about 6.5 BCF, so a nice well. At the moment, I do not see any leases recorded in section 19. The horizontal wells in that area are generally two section wells. Section 19 is a bit squeezed because it is on the state line and it looks like there may be a wetlands issue with the river. They may only be able to have a surface location in 18 and drill south into 19.
If you have not leased before, then I recommend getting a good oil and gas attorney to look at any draft lease. The drafts are not usually in the mineral owner’s favor and need quite a bit of editing. You can also wait for force pooling. It can also be a good option if offered.
If you need to deal with the BIA, then that adds another layer of complexity.
Thanks for your reply. I’ve done more reading on the forum but of course there’s lots to learn.
It there a chance that asking for a better offer would work or are the landmens hands tied by the company they represent?
I tried to look online to verify if my address is correct but didn’t find anyplace where I could see it. I’ll email and ask them to correct it if needed.
I did notice the mineral document I have at the court house is an “Affidavit Surviving Joint Tenant” but that one of my relatives, who has equal mineral rights as I do, has a document called “Mineral Deed”. Would it be better to have a lawyer create a Mineral Deed document for me?
I found a little info on the Judge well on welldatabase. Maybe this is the one that might go to 19? I found one of your older posts where I see how to calculate my decimal interest and to use WTI prices, but I’m not sure how to put it together with everything else to see my potential income. Is there some other post or resource that shows an example of this?
1)- you can ask for a better offer, but the landman works for the company they represent and they may only be able to offer certain amounts. Other landmen may have different constraints
2)-You can try looking at www.okcountyrecords.com and see if your name is listed correctly. It has most of the counties. You Surviving Joint Tenant may be fine since one landman already contacted you.
The Judge will not go into 19 since it has already been drilled, but another well could.
The equation for your decimal amount is net mineral acres/actual spacing acres x royalty x % perforations in your section. It is just an estimate to get potential income because you do not know the percentage of perforations in your section. It might be 100% or it might be something less if the well shares with sec 18. You also do not know the volumes of oil and gas or the prices of the products.