Thanks for the reply MBarnes. The property has already been leased to Continental and I have reatained a 1/5 interest. The offer ($9500/acre) is to PURCHASE the rights and apparently will be the high bid for this area. Thank you for the info on the wells being drilled. Where can I find the info on production when they are completed to estimate the potential income. Is there a site that furnishes the info on well numbers, stats, etc.?
Thank you M. Barnes. Chugging is a great word to describe what is going on! There is a workover rig on the Arlon now. It was set up last Wednesday, June 24, 2015 and they are still working on it. Earlier in the year they also had a rig on it. I know those rigs donât come cheap. Felix just drilled a well 2 miles to the south sec.12-15-11. I donât know if that can impact what the Arlon is producing. Thanks for your help.
Some good links to put in your Favorites list:
well info by location, OK tax site for production sales, great mapping website, OCC well records, etc.
http://www.occpermit.com/WellBrowse/
https://www4.oktax.onenet.net/GrossProduction/PublicSearchPUNbyLegaâŚ
Here is a spreadsheet that will help many of you. Use it as a guide only. I am a geologist, not an attorney or an accountant. This is what I use to ponder my decisions.
You can insert your own net acres in the yellow box. You can input different prices for oil and gas. It is set right now with $60 for oil and $3 for gas which is pretty close. It does have the 2% state severance tax, but not OK personal income tax or federal tax so keep that in mind.
You can insert the different bonus options. Then the first four years of a Woodford well decline curve are built in. I usually take the nearest well to mine and insert reasonable completion numbers. They may be higher or lower than those shown here.
Now you can compare three different bonus/royalty pairs. Bonus is pretty insignificant when you look at the difference in the royalty percent. It is important to remember than many of these sections may have more than one well, so you need to take a 30 year view and not a next year view. I have some sections with 9 horizontal wells (which is why I built the spreadsheet.) Some sections are getting even more as time goes on. Most of the production comes in the first four years, but it levels out and can continue at low levels for 25-30 years! Nine wells at low levels can be significant! I usually go for 1/4 in a proven area, even if I get no bonus.
I have another spreadsheet that shows a sales offer comparison if you are interested. I never sell, so am showing you this one first. NMACalculationsimplemodifiedfor%203%20bonus.xls
Try it and then come back with questions.
Bruce: would you first mind sharing who the offer is from? is the property leased?
Itâs not just one well, itâs the possibility of 9-12 wells. Think bigger! Multiple reservoirs as well. Friend me and I can walk you through a spreadsheet that I posted recently.
For those of you pondering selling, please consider the pros and cons. I was in the same situation a couple of years ago. All of a sudden I received all these offers on some acreage that only had one well. Red flags went up⌠so I did a little investigation and since I am a 30 year retired geologist, I knew what to look for.
Horizontal drilling was just getting started in my area-in just the Woodford in Canadian county to the south of Blaine. Well, now those sections with just one well each back then have nine wells each and those early offers were exceedingly low compared to the true value of the mineral rights. Blaine Co and northern Canadian Co have the addition of the Meramec play (STACK) play, so now you have more potential.
Please read the investor presentations from Cimarex, Devon, Newfield, Marathon and Continental Resources for the last year. Use the Blaine County map to figure out where your land is compared to their maps they post. Blaine%20County%20Map.pdf
Go in particular to the Slide 22 of the Cimarex June 15 Investor presentations for a great map.
For an example, 16N 10W is just starting to get horizontal drilling. I used the Toms well in 16 & 21 as an example to populate my attached spreadsheet. The well goes across two sections, so I just took the production from âhalfâ the well for a one section estimate. I donât know what any bonuses you may have received, so I used the pooling bonus for 15 just next door. The spreadsheet shows the typical Woodford decline for JUST the first four years for one well, two wells, six wells, nine wells, 12 wells. (Yes, there are 12 wells and more in some sections.) These wells can last 20 years at low levels. I estimated 5 acres net. Copy the spreadsheet and put in your own numbers.
I used $60 for oil and $3.00 for gas knowing that it is a little high for today and a little low for the future. This is just a ballpark estimate!
I compared the production revenue with the bonus royalty pairs with the sales price of $9500/ac. With one well, you âmightâ come out ahead with selling, but look what happens with two wells, six wells, nine wells.
Just FYI, early offers are usually about half to what the actual value is. Play with the spreadsheet to help you make decisions. Raise the oil price to $70 and the gas to $4.00 and see what happensâŚ
Do what is best for your family, maybe only sell half if you have to, but I am not selling any of my acres in Blaine. I am in it for the long run.
Received an offer to purchase our section for $4,250 an acre which based upon the other comments seems to be about half what we should be offered. My brother and I own 153 acres Section 7 Township 17 North Range 13 West. Any comments or recommendations would be appreciated.
Yes it is leased to Continential and I retained 1/5 interest. Continental has just applied in June for 640 spacing. Native OIl is the offerer and were $700/acre higher thant the next two at $8800/acre. It seems to be a substantial offer from what Iâve read here.
What kind of production would a well have to have to justify paying that much an acre?
JW It is leased right now. The company is Ferrel Oil Co. out of OKC.
I was wanting to find out what a good price would be as we are nearing retirement. I have read here up to $9500 an acre.
To Bruce G Anderson:
You wonât likely get $9500 per acre in your area right now. Blaine County is a big place, and not all locations are equal. The county is 24 miles wide east to west, and 42 miles from north to south. Some of the figures you are comparing to are a good 20 miles from your location.
You are right on the Dewey County Line. Continental and Devon did a lot of early Woodford drilling in that general area. The thickness of the Woodford is much less than in the better parts down in Canadian County. I can assure you that many of the Woodford wells in your area, by todayâs standards, are disappointing. Many of Devonâs wells in this general area have been losers. (Gas prices were much higher when most of these were drilled to be fairâŚ)
The real pearl right now in Blaine County is the Meramac. That is what is driving most of the current leasing and speculation. Both Newfield and Plainview and others are leasing in your general area. However, itâs a stretch to say that the Meramac is a sure thing in your section. Not enough wells have been drilled yet to delineate it. The general initial lease offers have been in the $600 to $800 range, which is well on the low end of leasing offers to be sure.
It would be good to listen to all the information provided by M Barnes. It is also good to realize that not everyone is going to get 9 wells on a section. I have lots of property in Canadian, Blaine, Kingfisher, and Dewey counties. I have 2 sections with infill drilling - 9 wells per section. You canât beat it if you are lucky enough to be in the core area. However, I have dozens of sections with only 0 or 1 well per section. Some of these are in dry gas areas. At current commodity prices, there is no hope of infill drilling. However, I am in this for the long haul, and I suspect some day they will; I hope Iâm still alive then.
If you are a patient man, I would hold on to some or all of the minerals. If you need the money, you donât have to sell all of them. Sell only part. Itâs easy to be optimistic, but the core areas that have infill drilling could be a long time coming. Yes, a sale will involve taxes, but fortunately it is a long term capital gains tax, which could be up to 20% on your gain. Thatâs a whole lot lower than ordinary income taxes that most people pay.
If you were definitely in a core area with a certainty of infill drilling, it would be foolish to sell under almost any conditions. However, 7-17N-13W is definitely not in that category at the moment. It could be some day, and it could just as likely not be. There is a risk to every decision.
This is what the production decline curves for gas look like for the 27 wells in Canadian County. Three sections with 9 wells each. They made some mistakes, but learned from them. I think pictures help you visualize the possibilities. Parts of Blaine may actually have more oil and that gets a better price.
I am not saying they will drill nine wells per section in Blaine, I just want you to see that one well per section may not be the norm. Talk to your attorney and your accountant before selling. You will have some whopping taxes to account for either from sales or from royalties. Keep that in mind.
4-17-11W recently received an inquiry about purchasing mineral interest by Ferrell Oil. Didnât even realize we had these mineral rights. Advice?
Roxi-Donât sell unless you understand what you have and learn more about the business and even then you may not want to sell. Ask them why they think you have mineral rights and ask for proof-who did it come from, are there more interests, etc. Do some research. Read this forum, the MINERAL HELP and BLOGs above. Also read Canadian County since many of the comments are related.
As JWAnderson said below, the county is large and geology is important. Take many months to get up to speed. Offers to buy are often lowball to actual value or sometimes on target. But anyone who wants to buy thinks they can make a profit and they know something you do not, so get informed.
1 Like
Hello,
We are actively leasing in Blaine. Please contact the below with any minerals open to lease.
Thank you!
Tyler Allen
Felix would not be drilling if they didnât think it would be successful. No one is going to spend millions of dollars unless they think they can make money in the long run. There is quite a bit of successful drilling in the area. Again, please get informed before you decide to sell. Read the last six months of this forum. Read the Blogs in the tabs above. Go online and read the investor presentations for Cimarex, Newfield, Marathon, Continental Resources and Felix. See what is happening in the area.
You will probably get offers to buy your minerals, but they are generally much lower than the actual value of the minerals. If you have specific questions, please friend me and I can walk you through the issues-pro and con. Then you can decide.
Was thinking on selling my rights which is 4 acres section 8, Township 15n, range 10w, Blaine co. Any feedback on this particular section is appreciated. Thanks Dana
Dana, I would not sell right now. Felix Energy is about to drill a well in that section. The pooling is August 11. Have you gotten all the paperwork from the OCC?
I have received paperwork and have left them a voicemail on who is all drilling on that section. I spoke with felix and they said they should be drilling in a few months. What there not saying if its promising or not.
If Bearcat is asking for a hearing to drill, what is the approximate timeline to see them drill and to find out what is happening? Should i ask Cimarex what is going on? The lease does mention that Cimarex has the right of first matching any purchase price agreement.