Leasing Question:
I just received an offer to lease but have never seen this verbiage on past offers which is stating the cost of drilling the well, both dry or completed and are asking us to either participate with prepays or elect one of two offers with bonus and royalty offers. Is this common?
Thank you.
Mike, that is common. Quite frequently, it is before the pooling hearing and those numbers might be close to what is offered at pooling. If you are new, read the last six months here and then hop over to Grady, Stephens and Garvin to get the info on clauses to have in your leases, handy websites to visit, etc. DO NOT take the lease they will tell you is “standard”. It is not in your favor and there are some important things to negotiate. Come back here if you need help on it when you get closer to signing. Or you can wait for the force pool. Do a bit of catch up reading first and then you will be more prepared to make a decision.
Thanks Ann…I’m pretty green at this. It’s been in the family for over 100yrs and I’ve only recently inherited it from my family. I appreciate your help!
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Jeanne,
That section was last pooled for $1400 and 3/16 a couple of years ago. No new pooling in a while, so someone would have to have a new offer and comment here.
Great feedback Mr. Barnes, thank you and thanks to all!
well I probably will word this wrong
! but we are all interested to find out how a well is doing in beckham county. it is the Deal 5/11/21 1H. it is on the 8//11/21 and were told it was a horizontal/directional and it was on our royalty. we saw one time in July that it had started producing in May and the Tulsa World said how many barrels of oil and how much gas. my uncle is the only one in our family to receive the intent to drill papers, and no one has gotten the division order papers. I had found our from land man it is on our royalty. Should we have heard something by now? Thank you in advance for any directions we might go now.
http://imaging.occeweb.com/OG/Well%20Records/1DD05EBD.pdf
http://imaging.occeweb.com/OG/Well%20Records/1DD23B6E.pdf
Thank You so much for the information. Ron McKenzie
Just found out that, contrary to what we’ve been hearing all year, Linn will not be drilling in 7-10N-24W; I was told they have a deal to sell off their interest there, and do not know if the buyer plans to drill.
There is a lot of new leasing in 10n-24w.
Is there a formula for determining the fair value of a person’s interest in a well that has been producing for over a year now? I am interested in purchasing their interest in the well and wanted to offer a fair price to them.
Don, there is a pretty exact engineering way to do it and there is a rule of thumb way to do it.
The engineering way is to plot the oil and the gas on a chart like Excel and then use a decline curve to estimate the remaining life of the well. Usually 12-24 months of production is preferred. Hyperbolic curve usually fits. Then you use the price of oil and price of gas projected out in the future to determine the value. There are programs out there that will do this.
The rule of thumb method is to take four times the value of the royalties for the last year if it is an oil well or seven times the value of the royalties for the last year if it is a gas well.
You said you wanted to buy interest in the well. That would be for that well only and only for the royalty of that well. The person would still own the mineral rights. If you really meant that you wanted to buy their mineral rights that included that well, that is another story. If you want to buy the mineral rights, then the land may be worth more if they are going to drill more wells in the section. Could be a totally different answer.
For tax purposes . . .“Could anyone tell me the value of mineral acres in Beckham county OK, Sections 27 and 28 back in 1998.” Thank you, Joy Yoakum Titusville, FL
You will need the Township and Range, not just the Sections. And you will need to go to the courthouse and look up leases taken in this area to get values. You might want to hire someone - conchojobs@gmail.com.
For tax purposes, a general guess from a public forum would not suffice.
We own a mineral interest of 44 acres in Beckham Co. in Sec. 7-T9N-R23W and are considering selling it. Does anyone have an approximate value estimate? Would appreciate your wise counsel as to how to go about selling the interest. I can be contacted at sjzrake@gmail.com. Thanks very much.
I do not have a feel for that particular area. Maybe someone on the forum has received some offers. Maybe you can sell half and lease half. Then you will still have your finger in the pie…
Good luck!
Steve, you might want to pause a bit. There have been 30 leases taken in sec 7 in the last 24 months, so something is percolating. Journey Oil & Gas LLC is the company, but they may be a leasing company for a bigger operator. There has been some directional drilling just to the southeast of you, so might be spreading toward you. If you want to lease, you will get a cash bonus now and then potentially royalty money later. If you are new to this, come back for advice on good lease clauses. You do not want the first lease that you get offered. If they are leasing so much, any estimate of value you get now will likely be undervalued as to true value.
Mr. Barnes, thanks very much for your wise counsel. I have another intended use for the funds. Yes, if a good lease deal, would keep, however, I may be better off with the revenue sooner rather than later. Do you have an approximate idea on the value per acrea one would get for selling their mineral rights in this area? Thank you in advance.
Good thoughts, thanks very much! Anyone else care to opine? Would appreciate any and all comments. Thank you in advance.