Anything happening in this area? Any opinion for values? A 'newbee' and would appreciate your comments. Ted
I "had" an offer at $400 / acre & 3/16th royalty on this piece, but countered at $1250 plus additional $400 / ac. if the lease extention was activated. Seemed reasonable to this newbee to ask for extention dollars, but it was rejected outright with a "thank you for your time". Your comments , PLEASE.
Ted is that 28-6N-4W?
All numbers below are based on 3/16 unless noted.
Continental paid $1050 and acre for 1-6N-4W in November 2011
13-6N-4W brought $225 in January 2012.
3-6N-3W was pooled for $750 3/16 and $700 1/5 in June
10-6N-3W was pooled for $750 3/16 and $700 1/5 in June
18-6N-4W was pooled for $500 in May
6-5N-3W (Verticle well) Pooled for $400 in August.
From what I can tell your property is on the edge of the “Scoop” the Continental mentioned in their report recently. But not in the “thick” area of the Woodford. Take a look at these two articles:
http://media.corporate-ir.net/media_files/irol/19/197380/CLR_Sunday_10_7_12_Anadarko_Woodford_3.pdf
http://info.drillinginfo.com/urb/woodford/
It looks like Energy Lease has most of the recent leases with TODCO having a few. It appears they are early in the leasing process. It will be interesting to see what the wells do in the immediate area. We have some older producing interest just east of yours in 6N-3W. I have only noticed one horizontal completion and it was not too exciting.
I’d forget about the extension option. An extension is to the oil companies advantage only. If you do decide to give an option it needs to be at least 30% higher per year than the primary term. Getting a good lease with good clauses should be as much or more of a concern than the bonus amount.
Im not very far from 1-6n-4w and If Continental paid $1050 /ac. there, should that not be a reasonable value for my 28-6n-4w? Thanks for the copy of the "pooling order" -- very informative, but a Continental type offer sounds much better. Appreciate your information. Ted
Ted,
I'm not a pro at this, but I'll try.
The $1050 they paid was for a multi unit lease they did a year ago. It was an auction of school land. When they do force pooling, it is my understanding that what they leased as part of multi tract/section leases do not count. If it is a single lease, the OCC is “supposed” to pool at that highest rate. I have negotiated a better deal in a multi section lease than I could have in a single section for that reason. Also that school lease was for 130 acres. That may have giving CLR the advantage to have the majority of the leasehold in that section. Chesapeake’s loosing bid was $318 for the same property. CLR wanted that property pretty badly to bid that amount. It is kind of hard to tell by looking at the leases who had what stake and when in that section. A lot will depend on what they are wanting to do with your section. But that is the last lease filed with CLRs name on it. They know more than the rest of us.
The person trying to lease to you may be a speculator or they may represent one of the big ones. You don’t always know. It could be a small operation trying to lease to drill some 2-5000’ vertical wells instead of a horizontal in the Woodford formation. I think we are going to see the companies really work the high end plays. If that CLR report that I linked is correct, I could see them focusing on the thicker parts of the Woodford as the long term returns will be better. Maybe Don or someone with more experience in this will chime in.
Too often I see people that are in a hurry to lease. It does not seem that is not always to their best advantage. However, interest in the area may drop and it might not ever get leased. The amount of your holdings and your financial situation will be a big part of that decision.
I’ve been sitting on several tracts and not leasing because they are not offering as much as I think they should. The ones I feel I did the best with were not leased until 3-9 after the first contact wanting to lease. Ref the one I lease @ 3 months after contact. I received 2.5 times the initial offer. 2 months later I had another offer for that same piece that was another 50% more with the same terms. You just never know how it is going to play out.
Rick: Thanks for all of your efforts and information. For someone new to this, there is quite a bit to absorb. I really appreciate your response. Ted
Rick: How / where do I find a Section map of McClain Co.? I need to locate some of the parcel info you offered relative to my parcel. Thanks, Ted
Ted,
I’m away from the computer so I can’t link the easily. Look under Blogs and 2-3 down is a blog for Internet resources. I posted some links a couple of weeks ago that should help.