24-11-8 (Union City)


Cimarex has informed us that they don't need a new lease but are using the 1972 lease to drill because there is very little production. We will be getting 12.5%. A lawyer has suggested we retain them and negotiate a better deal. Possible top lease which I'm not sure what that is.

That is correct. Look at your 1972 lease. If you have production from a current well that is economic, then they can hold you by the terms of your previous lease. The Sweeney 24-2 well is still online. Sweeney 24-1, maybe not. Which one did you get royalties from?

A top lease is when you negotiate a new lease before your old lease expires and it will take effect as soon as the old lease expires due to lack of production. It is a time thing, not a depth or area thing.

There is a lot of these kind of offers going on right now. Most of them are a leasing agent wanting to lease at a certain rate but only paying you 10% of the bonus upfront. They get enough mineral owners to front them and then they hire an attorney to try to break the old lease. You may not be successful and may never see the other 90% and are still stuck with the old lease. I would be suspicious of a cold call attorney offering to do that. You would be paying that money up front.

Cimarex has two wells planned in that section. Sweeney 8-24H which will be drilled on the far east side of the section. Permit to the Woodford. Carel 1H-2524X spuds in 36 and drills north into 25 and then 24. Targets are Mississippian and Woodford. You should be getting all the paper work for these wells and the increased density order that just came out. (hence the interest by the lawyer......) You have 36.6 BCF and 7.5 million bbls oil left.

Sometimes those old 1/8th leases with gross production language are better than the new leases that are trying to charge post production charges.

I think we got 10 cents Sweeney 1 last year and that's the one they are using.

If you are in that 160 acres of the section, you can call Cimarex yourself and request that they release your lease since the well is not economic. Probably won't work, but you can try. When was the last date of a check? If more than 12 months, you have a better chance.

If they release then can we re negotiate with them. Thanks

You can try! You want 1/5th or 1/4th and a good lease with no post production charges. They are not going to want to release it.

Yes that is what the lawyers are saying, no release

That Increased Density Order granted to Cimarex is going to be problematic. Really needed to file a protest, because a lot of leverage has been lost. Best of luck.