6-1s-4w Questions

I have a mineral interest in this location. Just received an offer from Continental for $500/ac. I had received an offer a few months ago for $900/ac (but I didn't have the rights quite in my name yet). He is saying that all of the competition has moved on....does this sound reasonable? It seems that there was a lease signed in the same area according to http://www.occpermit.com/ under Chesapeake Exploration back in June... possible they moved on since then? Anywho I am fairly new to all of this, any advise would be appreciated as if I should hold out for others or go ahead with it..... Also, I was recommended by someone on this forum a while back to get depth clause, pugh clause and no productions cost clause...do any experienced people on here have a good example of these clauses? Thanks in advance and sorry for the long post!

Joe, You need to talk to a forum member named Rick Howell, he has some firsthand experience in that area. Chances are he will see your post in the next day or two.


We have an interest in 6-1S-4W. I don’t want to go into all of the details publically why but it is tied up. Because of this I have been getting offers for the last 2 years on 6-1S-4W. This year a couple of the offers were for $1000 per acre, and one was for more than that. Another adjacent section that we have leased saw an offer for $1500.

Yes, the competition may not be as interested but when/if they pool it, the bonuses should be at least $1000 an acre, but I’m betting on $1500 and acre. The pooling order is supposed to reflect the largest amount paid.

In my opinion he may be trying to pressure you into making a hasty decision that is not in your best interest. If they didn’t want it, they would not be spending the time trying to lease it from you.
So how many Net Mineral Acres do you have?
If you have 2 acres, you are basically taking $1000 now, instead of $3000 if it is pooled. The downside is that the section may not ever get pooled and you will not get anything.

Another thing, you said the offer was from Continental. Are you dealing with them or are you dealing with an independent representing them like Jackfork or Bearcat?

On the clauses. Unless you have a large acreage, likely they will want to supply the additional clauses used. There may be better clauses for you to use, but they will likely not agree unless you have the clout (acreage) to push it
A pugh clause might not even be necessary again depending on your acreage.

Rick may I ask you a couple questions. My interest is in 1-1S-5W. Is that similar to the area you are discussing above. (sorry for my ignorance...I'm a California girl). The person that has contacted me is from Jackfork...representing Continental. You mentioned that above...an "independent"...what does that mean? He says they are basically backing out of the area...that $500 an acre is good. Maybe he can get us $750. I have about 15 acres and my 2 brothers have about the same. I have proposed $1000 an acre to the rep from Jackford because I recall that another lease...less than a year ago was for $1400 an acre. What are the clauses that are important. I understand depth clause (is that the same as Plugh...and do we need both horizontal and vertical?? Anything else that you would think is really important to have in a lease? They are proposing 3 years. Can you explain what "pooling" is and if we should wait for that in your opinion. It sounds like a risk??

Thank you!!

Rick, thanks, I actually believe it was you that gave me some advice before. I have just over 8 acres... would a pugh clause be necessary? Seems to me that a good depth clause would be beneficial...I just don't really know what to look for. The guy I have been talking to is with Jackfork, not actual continental. I do know I'm in no real hurry, but I don't really want to sit on it for a couple years without getting anything either....not really sure what I should do... do you have any guess as far as how long it may take them to pool it? Maybe I should offer $1000/ac and see what they say....

-Dee that is basically what the guy has been telling me too (except he said he has to turn an offer in to continental for me to get a higher bonus)...."sales" technique maybe?


Sounds like a car salesman saying he has to ask his manager first. They want you to feel like you got a special offer.

When I negotiated with Jackfork and asked for her best offer she told me without hesitation. Offering me another $400 per acre. I think the Landmen know going in what their limit is and what they hold back is gravy.


From everything I can tell (from the pugh clauses I have been exposed to anyhow) a depth clause is usually like a horizontal pugh clause. Be careful. a few words can make big changes. Depth drilled, Depth produced from, deepest formation produced from, etc. Yes, you want a depth clause, or a horizontal pugh clause. I doubt a vertical pugh would do anything in your case. We have properties that have been leased this year that have production going at shallower depths from 50 years ago. A depth clause is what kept us from being stuck with 1/8 RI in some case that these old leases were signed for. So you need to be careful.

If the 8 acres are all part of the same 40 acre tract, likely a vertical pugh is not necessary. Since we will probably see a 640 acre unit, it should not make a difference regardless. Also many of the pugh clauses are combo, with both horizontal and vertical language.

Sandridge has most of the property leased and the leases will start expiring in April of next year. The majority of the recorded leases will expire by the end of June unless they have an option. The one we are tied up with does not. It is possible but not probable we will see an application approved, permitted, and drilling started by then. Unless Continental has a deal working with Sandridge I don’t see anything happening for a while.

So you could be passing up on $4k. Or you could take the $4k and be passing up on an additional $40K in 12 months.

I could be wrong but I think you have high pressure sales going on. But on the other hand, I know a couple of landmen on a personal level. I’ve seen them tell the people straight up when they are wrapping up in an area and that is all there is.

It is all a game and their job is to lease as cheaply as possible and get the land tied up. You have to decide your risk. Does $4k change your situation enough to turn down a much higher payday down the road? If they are going to drill in the next 6 months, you are pretty much guaranteed 150% more than what they are offering if you get pooled.

Ask them when they are going to drill? If he is trying to high pressure you they are going to say soon. Then you can take a risk and offer the lease at 12 months for $500. No big deal if they are really going to drill it within a year and go to the secondary terms, HBP.

Some landmen have much more leeway and control than others. Some are simply given a list of names, NMA, and told to lease what they can for less than $xxx.00.

What we don’t know if this is Continental starting a first round of leasing or finishing up the entire section.

Another thing you could do the $500 with a favored nations clause.


I know it sound crazy but your section sits right next to the one Joe is asking about.

Independent as in not being an actual Continental employee. Jackfork has been doing most of the leasing in the area for Continental, but Bearcat seems to be leasing some of it as well.

In Oklahoma, a unit will be pooled to bring in all of those properties in which the owners did not lease to the operator. They may have been leased by other companies, didn’t want their minerals produced, or could not be found. The OCC is supposed to be working in the interest of the owners and you “should” get the top price paid to lease per acre in the section. It will also have most of the clauses you should ask for in a lease. More info here.


Clauses are a negation process. You could have a clause in there to bring you an ice cream cone every Saturday the oil well is producing, if both parties agree to it. So some clauses might be accepted and some might not. Then you have to decide if you want to lease under those terms or hold out. With 45 acres, you have a bit of leverage to get what you want.


No extension.

No or limited title warrantee

Depth or horizontal pugh

With that acreage a vertical pugh (still likely going to be a 640 acre pool and not a factor)

No productions costs

Shut in clause

Favored nation clause if you can swing it.

I see forced pooling used as a threat. It is not necessarily a bad thing!

They may be backing out of the area and $500 may be a good current price. But he is working for the oil company. Let’s say you were involved in a car wreck. You get a call from the other parties lawyer and you are getting sued. The lawyer offers an out of court settlement for $5000 and tells you it is a good deal and the offer is not going to last long…… you get where I’m going with this.

Dee, you have quite a bit to lose or gain from all of this. I’d really suggest getting an oil and gas attorney to review it. Spending for a few hours of time divided across 3 owners might be a very good investment.

The older leases in your section are only about a year old. I’d push for a 2 year lease.