My experience as a division order analyst has taught me that putting drilling deals together can be a complicated, lengthy process for the operator trying to get a well drilled. It’s not unlike herding cats: leases start to expire while verbal agreements to farmout acreage linger without a signed Farmout Agreement, and on and on. Often, a company owns only a large portion, but not all, of the leased acreage inside a pooled unit they want to propose for drilling an initial well. They have to contact the outside owners of the remaining leases covering those other lands, before negotiating and drawing up a Joint Operating Agreement or Farmout Agreement (depending on what gets negotiated). Those things take time.
If you are being approached for an option to extend, it means that the current Lessee (holder of your lease) is anxious to get a well drilled, which means you can expect to begin receiving royalties in the foreseeable future. Before an outside company will sign a JOA or Farmout, they usually require proof that the company proposing the well has a specific number of gross acres locked under lease.
The earlier the Lessee can get you to sign an extension, the sooner they can get outside leasehold owners to sign a JOA and get a drilling rig contracted. And they might actually be trying to put together a series of contiguous PUDs (perhaps step-out wells?) so if the first well is a barn-burner they can quickly drill density wells and also form new units. Possible bottom line here is that you could have decent royalty checks coming in sometime in the near future, especially with 80 NMA.
