Activity?

So it’s almost November 2018. We signed on with Camino in Feb '17. We’re closing in on 2 years and have heard virtually nothing. I’m starting to get discouraged, and wondering whether it’s more cost-effective to sell since nothing seems to be happening. (Talking about 5-12n-6w here.) We’re still getting offers… and it seems to me that we’ll make much more $ just selling again than we ever will sitting here waiting for royalties. Any advice you have would be appreciated – thanks so much as always!

TPR Mid Con filed all of the paperwork to drill a horizontal well in that section earlier in the year. Camino just filed a new case in September to change the operator to them. Patience is the name of the game here. That is why the leases are three years long. There are horizontals all around you. Some sections have started filling in with development wells. I am getting offers to buy in that township, but am not selling. In the long run, I think I will make more money from the royalties than the sales offers. Most of the offers are for the value of one or two wells. Room for many more. Technology is improving all the time. Since I have heirs, I hang onto my minerals in good areas like this.

As always, I appreciate the response and your advice! Thanks!

My brother-in-law asked me to send this to you, to give you a ballpark idea of our situation:

We’re comparing the potential revenue of selling to potential revenue from leasing. We’ve had offers to sell that would amount to $250K in Section 5. The closest data point for leasing is a new well (on an old lease) in Section 8. Those royalties (during the first 8 months of production) have been averaging $750 per month. Even correcting for the NMA/royalty rate associated with each section, the royalties from a single, new well like this in Section 5 wouldn’t come close to the sale revenue. Obviously we don’t know alot (is Section 8 well production typical?, possibility of multiple wells in 5?), but that’s where we are.

James, How many net acres do you have and what royalty did you lease for? Did you have post production costs in your lease or not?