I have never been involved in this type of proposal so please bear with me. Calyx Energy, who is based in Tulsa Oklahoma has approached us with an offer to participate in one of the following 3 proposals. The location is Lincoln County Oklahoma Section 27-T17N-R4E and 20 acres has been indicated for lease/assignment. The well proposal is Smith27-17N-4E 1WH. Calyx energy has proposed the following: (1) lease/assign for $250 per net mineral acre bonus,1/8 royalty,1 year term. (2) lease/assign for $200 per net mineral acre bonus, 3/16 royalty, 1year term (3) lease/assign for $100 per net mineral acre bonus,1/5 royalty, 1 year term. I am trying to figure out the best option above or consider other options if someone cares to comment. Your help would be much appreciated. Thanks Derrick Dean
Myself I like the higher royalty lower bonus on any 1 year lease… You can make up the loss in bonus in 1 or 2 months on a higher royalty if they drill and if it produces… It’s a gamble any way… On 20 acres your only looking at a 4000 differance between the leases on bonus…
Derrick,
If the well has not been drilled you may have other good options like do nothing. I recommend you "friend" Rich Howell for sage advice.
If a permit ha been issued, you may have been force pooled but may still have some options.
Gary, how will doing nothing be a good option? He'll get pooled with no opportunity to negotiate a leases with clauses, etc. yet end up with the same royalty and bonus.
And no chance to participate or farm out in low risk offset wells.
Tim Metz said:
Gary, how will doing nothing be a good option? He'll get pooled with no opportunity to negotiate a leases with clauses, etc. yet end up with the same royalty and bonus.
That is how doing nothing would be a good option?
Doing nothing may cause the potential lessee to make a higher offer. I have lost count of all the times I have not even replied to an offer and received a higher offer from the same potential lessee two months later.
But your talking North Dakota, what you don't know is that it's not like that in Oklahoma, totally different, there is no carrying someone, they'll just pool you and you'll lose the opportunity for any lease clauses in your favor that most will go for. It doesn't make sense why anyone would take the chance getting pooled in Oklahoma which is what state his interest is in.
No Mr. Metz, I am talking Texas, but it happens in ND also. You really should not make such assumptions.
The pooling in Oklahoma is not such a bad deal in my opinion. The operator only gets a year to drill and since the pooling order is based on what people in the pool leased for, you could come out way ahead on a per year basis and be back in the market sooner if they do not actually drill. The corporation commission may also limit the formations the operator may drill and I consider that better than a depth severance clause that may be open to interpretation.
Mr. kennedy,
I only assumed based on your profile stating only ND as where you owned mineral interest so I had no idea you owned so much mineral interest in Texas that you have lost count of all the times you received multiple offers on them.
Very rarely do they do a pooling in Oklahoma and not drill. How in the world do you come up with OCC may limit an operator to specific formation and how one would consider that better than a depth clause? Your mineral interest in that section or unit would be held by that well (even if it doesn't produce especially if it classified as a gas well) no matter what the formation limits are so how would that be better than a depth clause? A lot of these new horizontal wells are being drilled on HBP interest that is on an old 1/8th lease and they didn't have a depth clause in their lease or people that thought like you and just got pooled and didn't have a lease at all yet alone a depth clause, they lost out on large bonuses and up to 25% royalty, twice that of a 1/8th, I know many that have lost 100's of thousands of dollars of lost revenue. Also what about shut in clause, they could hold your interest forever without one or a clause limiting deductions. A pooling could make your mineral interest just about worthless forever? Just how in the world do you figure that is better?
My question originally was addressed to Gary but you stepped in to answer for him rather than hear what Gary had to say as I was curious about what he meant.
And put your foot in it. I have twice owned mineral in Texas, I just don't own them now. Sold some with a house and gave some under a commercial property to a cousin who could really use them..
I have no idea why you are bringing old HBP @1/8 royalty leases into this discussion. Perhaps because you looked at what you did have to say and it looked paltry?
When you are talking about the shut in clause, you ASSUME that you will get one and that is not always the case, at least not beyond the standard $1 per net mineral acre per year. which is scarcely better than nothing.
I never said that someone should take the 1.8th royalty and not go for a higher royalty in a pooling, once again you are making assumptions.
You talk about 25% royalty, you of course get that on absolutely every lease negotiated? The majority of leases? Very few leases in Oklahoma? Please answer. I won't generalize what you say like you have done to me, so I am asking.
The OCC can and does limit formations that it deems to not be common sources of supply. Show me where it says they can't? Operators have to ask for the formations they want to pool, there are cases where the operator has had to go back and ask for other formations, pool and pay bonus again, be late drilling a well and have to pool and pay bonus again.
Are you saying that the operator can go to the OCC and say they want to pool anything and everything under one or two square miles and the OCC will just grant that? I'm interested in your answers.
If the pooling would be so much better deal for the operator? Why don't they just lease one person and pool all the rest? I can't believe the operator would give up that much extra profit voluntarily, unless of course there is no more profit in that situation and limitations that they would rather not have to endure. Follow the money.
On my home page it says where I own minerals, not every place where I have ever owned minerals.
As for my input on your question aimed at Mr. Hutchinson, I did not claim I was speaking for him. This is a forum, if you don't want someone to comment on what you wrote, I suggest you PM the person you are addressing.
In fact, my post was not addressed to you but to the forum at large, sorry you took it personal, which means exactly what I said. I am not sorry I posted it. What I said had more to do with what Mr. Hutchinson was saying than anything else until you leapt out of the pack and claimed it for your own.
Tim Metz said:
Mr. kennedy,
I only assumed based on your profile stating only ND as where you owned mineral interest so I had no idea you owned so much mineral interest in Texas that you have lost count of all the times you received multiple offers on them.
My question originally was addressed to Gary but you stepped in to answer for him rather than hear what Gary had to say as I was curious about what he meant.
Mr. Kennedy,
Even if you don't understand or know what your talking about others will from reading what we've written, so I'll leave it at that and not argue about how being pooled is not a good thing in Oklahoma which is what I only wanted Gary to elaborate on and from your post you obviously don't understand. So many, Gary included, say that lease, the lease, it is the future royalties and lease terms and now here it is said the opposite might be best. Once your being pooled very very seldom will they negotiate any lease as there is no need for them to at that point.
I will answer you, doing nothing in Oklahoma will get you pooled (in Texas you could be excluded from the unit) and doing nothing will cause you to get a 1/8th royalty, that's how you'd get a 1/8th by doing nothing and I bet all Oklahoma lease offers are better than a 1/8th even if you don't get the up to 25%, I said up to, which they do get, I did not say one gets that on absolutely every lease negotiated like you laughingly try to make me look bad by saying.
Like I said, I had no idea you owned minerals 2 times in Texas where you have lost count of all the times you received multiple offers on them. Also, how many times have you leased in Oklahoma and they refuse to give you a shut-in clause, I was pretty certain they are all okay with it. Since you didn't understand why I brought up old 1/8th leases into the discussion I will explain, to look at the future one can look at the past, I'm not going to get into it, it's obvious at least to some, mistakes you make can follow you forever. You just want to argue. Say what you want, get in the last word as I will not argue on this discussion with you any more.
Your do exactly what you say I'm doing, trying to change in peoples minds what I said. I said no shut in clause beyond the $1 per year which is pretty much pointless.
I asked how often people are leasing for 25%, not that you said people get it every time. Once again you do what you say I'm doing, trying to change in peoples minds what I actually said. I never said that you said you get that in every lease. I was asking you how often you get that, and you seem to have no answer.
I also said previously that I was not saying someone should not select a higher royalty in a pooling, we were talking about doing nothing in a lease offer. Mr. Metz, apparently you lost track of what the thread was about.
You may want to go back and check your reading comprehension. We were talking about a LEASE OFFER, not a POOLING. As I said above, I never told anyone to do nothing in a pooling.
You have answered no questions that I have asked. I still have no idea what old 1/8 leases have to do with a lease offer today. If it were already leased, would the owner be asking about a lease offer?
You are incorrect that I want to argue, I did not adress you, it was you who addressed me. It's a pity you don't even know what the thread is about, a lease offer and not a pooling, two very different things. I won't tell you to read again my posts in that light because I don't think it would do any good.
You misunderstood what I was saying then mischaracterized what I did say. This was all unecessary. I did not adress you. No response was required by you whatsoever when I said,
"Doing nothing may cause the potential lessee to make a higher offer. I have lost count of all the times I have not even replied to an offer and received a higher offer from the same potential lessee two months later."
If anyone was picking an argument Mr. Metz, it was you.
The last word, is we are not talking about a pooling, but a lease offer, pooling came from your mind. We are discussing a lease offer, not old leases at 1/8, once again that was supplied by you, totally off topic.
Well, come to find out that our lease has been sold from Calyx to Universal Land Services which the land an contacted us and was going to send us our paperwork. Several weeks have gone by and heard from Mr. A this yesterday. Turns out that our property has already been drilled on by a company called Porter 1A. He said that he knew that some of the surrounding land owners have been receiving royalties and they have their hands tied until they find out about this company and if we have any back pay due to us. I have been trying to find this company, with no luck.
Robert Pritchard said:
Myself I like the higher royalty lower bonus on any 1 year lease… You can make up the loss in bonus in 1 or 2 months on a higher royalty if they drill and if it produces… It’s a gamble any way… On 20 acres your only looking at a 4000 differance between the leases on bonus…
Come to find out that someone is already drilling on the lease. However, we have never gotten royalty checks because the lease has been bought and sold several times and our deed information did not follow the buyers. So how do I backtrack and find where the link broke to receive royalties. We also have another lease that has 3 Rigs on it, same problem.
Derrick,
Actually, American Energy Woodford LLC applied for spacing order in your section. Calyx and American appear to be closely related. The Stanley Dean Trust appears in the application. So you will be pooled if the order is approved. Look for a Commission order in the mail upon approval and it will spell out the options above PLUS some others. With 20 acres in 640, the Trust may decide to avoid limiting its new oil business upside by leasing the entire mineral estate in the Section. No need to rush into a decision now when better choices may be coming soon. Calyx may be the operator in fact which is good. The appear well organized and successful in the area and in for the long term.
Thank you Gary, however, they found out that there is already drilling on the Porter 1A and pulled out. I wish that they would drill, they want to go to 8K feet. I have been contacting the operator to get him to add us to the deck sheet, I found out that Shell Oil has been purchasing the oil, but we have never gotten a royalty check. He has not been very helpful and tells me to keep calling back to get his landman information. I actually just tried to call him(yesterday he told me to call back today as he does everyday), his phone is disconnected and the office phone number says that the mailbox is not set up.
What do I do now? I cannot find out whom was operating before him now.
Jo Lynn, If you are talking about 17N-4E - S 27, you may be getting bad information. If you can get an API number of this Mueggenborg well, send it to me and I will check it out. I can find no such app or drilling in the past 3 years. You pay taxes, call the Oil and Gas Commission. It is their regulatory duty to monitor all oil and gas wells in Oklahoma.
Gary H>
Jo Lynn said:
Thank you Gary, yes, we did receive the notice from American Energy-Woodford however, they pulled out when they found out that it is already being drilled on. The operator right now is John Mueggenborg, but cannot get any information from him. We have never received application information from him or royalties etc. I have contacted him, but still do not know any information as to whom to contact regarding lease information.
3508120678, I spoke to Shell Oil, they said that the last purchase date was 8/13.
Operator #18268 Thanks.