I agree with MSanders. I have been in the oil & gas industry for 35 years - both as an operator and a ranch and mineral owner. I thought Stewart’s answer was perfectly reasonable. I turned down an offer last year on minerals in Texas at $9,000/acre because I knew that Pad development might occur and, full-scale development would be more valuable. Today, there are no mineral buyers in that area. I expect prices to return but, anything can happen - price declines and poor wells. So, while I prefer to hold my minerals (partly because I understand the full value chain and don’t need to sell), I have seen energy assets lose substantial value as often as substantial value was created. I would advise you to hold the minerals and not sell, but I neither know your personal situation nor the outcome of prospective development. If a good well is drilled, certainly in-fill development will generate much more value. But, time and oil/gas prices are a big consideration in that value determination. No telling, once minerals are held by production, when such in-fill development will occur. If, on the other hand, a well is poor, value will be greatly diminished. In any event, whether I agree or not with the substance of Stewart’s response, I think the vitriol on the Board was unwarranted. People, it’s Christmas for goodness sake.
Stewart,
These people are asking for help; they are doing their homework and attempting to not get “cheated”.
Do not give them ‘Bad Advice’ on this forum. You WILL be called out for it.
You are on the opposite side of their table. I have dealt with “Land-men” for 40+ years and have met 1 or 2 really honorable ones.
“You buy so you think you know” ??? (you know what’s best for you-that drops you out of the “Honorable” position) As you are well aware of, $7500/ac is a drop in the bucket compared to the income they and their descendants will receive if they keep their minerals and let the little checks flow in. (which you seem to be trying to relieve them of) Only in an extreme, dire emergency would it be prudent for them to cash out their minerals. Create your own forum if you wish to miss-inform people needing information. Shame On YOU…
Jan,
I did not join this group to witness people bully others for sharing an opinion. You may not agree with what Stewart said but to make personal attacks on him is inexcusable.
I was a landman at one time and have dealt with many over my life. I am offended at your comment and generalization.
Susie,
Pipeline - $225/rod for one 8 inch line from ONEOK. We received this last summer so it could be higher now.
Stewart,
I stand by my comment as well. You encouraged JW to sell his minerals for $7,500/ac. No mention was made of the 10 wells/sec that is becoming common with Cimarex, Continental, Felix and Devon (I’ve heard from DVN up to 20 wells 10 each in Woodford & Meramec). My math is rusty, so please feel free to scrutinize and correct:
ac / spacing * royalty * /bbl * prod/day = royalty owners /day
1/640 * .1875 * 50 *500 = $81/day
Over 30 days = $2430/mth
Times 10 wells = $24,300/mth
This is definitely better than a one-time $7500/acre spread over 10 wells which is $750/well. The US oil companies are all trying to purchase mineral interests in Blaine, Kingfisher & Canadian Counties at this time. It is a sellers market. This forum is for uninformed people to understand the ramifications of their decisions. It is not for members of the O&G companies to “skin” the little guy. If you wish to participate in this forum, help the people to understand. If you wish to negotiate a purchase, do so in the Market Section. Do not present some of the facts in order to misinform.
JW,
Don’t sell
M Sanders & Jim Houston,
I took and still take exception to all of the pertinent information that Stewart left out. These people are seeking help and they deserve a fully accurate answer to their question. Not misleading partial info. As for it being Christmas…do you realize that not everyone in this country is a “Christian” ? Duh ! What does Christmas have to do with giving a fully honest answer to a question. I try to honestly answer every day of the year, not just at Christmas ! Apparently, both of you work in the O&G business and have forgotten just how big the learning curve was when you started out. I’ve been leasing from the other side of the table for 40+ years and I learn some new terms, new concepts and how much the oil industry has changed every time I write a contract.
Personal attack ? If either of you actually cared about this forum you would be apologizing for neglecting to mention some very pertinent facts that are necessary for these newbies to make an informed decision.
After all, anyone can forget just how much there is to learn in the O&G business. I do not have a stake in any of this. I'm helping people to educate themselves. Do you not have a state in the O&G business ???
To all interested parties in this conversation:
This is getting inane/ridiculous. You have every right to your opinion as do I. Let’s agree to disagree.
Jan: we certainly do disagree. I’ve yet to see a reply from you that didn’t insult someone. I have built and sold two large E&P businesses and I own minerals in Blaine County (since 1987) and I am as unbiased as you will find. I am offering no advice other than ‘there is a plus and minus to selling’. And, if you read my reply closely, you will see that my personal opinion is to hold, not sell, minerals. In fact, I have turned down several offers for my Blaine minerals, one from a Board poster. And, how does a Christmas reference offend you and/or humor elude you? Lighten up, Jan, it’s Winter Solstace. Better?
As Group Administrator, I suggest we agree to close this issue for discussion. Let’s move on, and respectfully consider the experiences and opinions of others in our future posts; you know what I mean.
Thank you, JW. That is an excellent reminder to all of us.
Sincerely,
Jan
Thanks to this forum I have learned how to do my homework. I have been checking the wells in sections surrounding my leases to see which ones are producing, which ones have been abandoned, and which ones just seem to be sitting there for some reason. In further searching out individual well names I find that those that seem to be “waiting” have been approved for “enhancement projects,” often a number of years ago. Will someone please tell me what an enhancement project is?
http://imaging.occeweb.com/AP/Orders/OCC_OG_27JPLR1_3B8MR91.pdf
http://imaging.occeweb.com/AP/Orders/OCC_OG_1H7RMO1_28BNPH3.pdf
The Joella well was drilled in 1995 as an additional well in the Springer to “enhance” the drainage of the reservoir. The Williams well could not drain the reservoir all by itself. The Joella produced quite nicely until 2014. It was dying in 2015. Last production I can find is in August, but they are usually behind by about four months. A 1.4 BCF was quite a nice well. The severance tax refund was collected after the required amount of time had passed. This well is close to being finished.
So in this case, “enhancement” was when a new well is allowed by the Corporation Commission to further drain a reservoir. Infill drilling is another term for it. There are other uses for the term “enhancement”, so that is why I needed the context.
Virginia, can you given my a docket case number or a well name and I can look it up and give you an idea. I know what that word means to me as a production geologist, but I need to see it in context.
Thanks Mr. Barnes. I have been checking on wells by going to the OK Tax Commission, Gross Production System and doing a legal search in each section surrounding leases that I own. When a well is listed as active but shows no production, I then do an Internet search for it by name. For instance, a well named Joella 1-29 is located in section 29, T14N, R12W. The search then comes up with the following information listed at this address: http://severancetaxrefund.com/mustang-fuel-co-joella-1-29-well-gross-production-tax-rebate-request-has-been-approved/
I have found the term “enhancement project” attached to a number of wells. My speculation is that it is worth hanging on to but not worth putting into production at the present time. One web site suggested that it was a term used for a period of time for better equipping the well for future use. If I had a better handle on what it means it would help me to understand where I stand in the big picture. (sorry, I don’t know where to post so this is doubled)
Ah Ha! Please accept my apologies Martha and thanks Clint.
Once again, thank you Mr. Barnes. Your answer makes perfect sense. It did not dawn on me that the two wells were connected and that the second was drilled to augment the first. “Enhancement Project” fits the situation. I’m learning one-step-at-a-time.
Virginia,
FYI: M Barnes stands for Martha Barnes…
Clint Liles
Does anyone know what happened to the Palmer 1H-6 well in Section 6 17N 10W?
Looks like they had to drill a replacement hole on it. The survey was just posted.
http://imaging.occeweb.com/OG/Well%20Records/1DD3D7E7.pdf completion report final well
http://imaging.occeweb.com/OG/Well%20Records/1DD3B197.pdf completion report of first well.