Crazy stuff

We had a 3 year lease with OXY that expired late summer without them exercising their renewal option. This, despite their having built a road and preparing the land for drilling. A few weeks ago, we receive an offer that is higher than OXY's renewal price. Yesterday, I get a call from a gentleman representing OXY who is inquiring about purchasing or leasing the land.

Just crazy!

My opinion, I'd not take a quick offer. It doesn't look like Oxy has leased much this past year in Reeves however there has been an excess of 5,000 leases taken just this year by others and there are multiple major players in this county.

Since you are saying OXY has done some work there, if you haven't already you might want to get a release from them. Might make that a condition before considering something new with them.

Mind saying where you are located?

Section 6, Block 50, T-7

Release from what, and why do you suggest that?

A release is a recordable document OXY signs that confirms their lease has expired and they no longer have any rights regarding your mineral interest. Since most leases say that "operations" can extend the lease beyond the primary term, having a release signed removes the possibility OXY might claim that road or other things they've done on your property extended the term of the lease. Getting that release recorded in the deed records also flags to other companies that your property is again available for lease.

It used to be pretty standard but it's gotten harder to get releases signed, partly because companies want to avoid the time and expense. One told me recently they wouldn't sign a release unless the lease included wording requiring it and a penalty for not doing it. I was able to get it worked out but from now that will be included with the other special provisions I try to negotiate.

thanks Dusty


OXY made a mistake. It happens. I suggest you find a way to work with them under the circumstances. I think you can likely control the negotiations and get what you want and, at the same time eliminate a legal hassle on what is a very valuable property.

Gary L Hutchinson

Minerals Managment

Oxy need not intend to drill a well to want to lease your acres and participate in a well drilled by someone else. OXY may think they could sell your pad site and road to another operator or have knowledge of a pipeline going through. Oxy may simply need a pipe yard and a pad site with a road already would be better than improving somewhere else.

Oxy intends to make money or save money. Always remember that there are more ways to make money in oil and gas than simply producing and selling.

Not sure what to do here. Is the consensus that if we lease to someone other thanOXY we will have legal troubles from OXY?

That would be why you would try to obtain the release from OXY first, to forestall the possibility of legal issues. That or negotiate a lease with an at lessees own risk clause with broad disclaimer of warranty of title. The alternative is to wait it out while getting a legal opinion from your lawyer reading your lease of how long you need to wait before your lease was a dead issue, might just be a couple of years.

It's a staggering thought, all the acres that are probably tied up for lack of a release. I can think of apt analogies but all of them would be inflammatory.


If you haven't responded to OXY why not tell them to put their offer in writing and you'll consider it but will need a release of their previous lease before you'll be ready to commit.

You didn't give any details about that other group you got an offer from...and it may be better not adding things here you wouldn't want one of those landmen to see...but in addition to the terms they are proposing you'll need to judge whether that company is capable of getting your mineral interest into production, or is more likely hoping to flip the lease. Regardless who you deal with I'd try to get the shortest lease term possible and avoid extension options.

Oxy is a good operator who I deal with. Their land people have been easy to communicate with and I have had no real issues.

May I suggest you call and communicate with them out of their Houston office.

Right now, I am really at a loss. OXY leased our land, prepared the land for a rig, did not pay us for surface damages (they specified $16k before they told us they decided not to drill), did not renew their lease option,, I'm supposed to be worried they will sue if we lease to someone else, and that they are a good operator?

How the heck would you feel?

Just another day in the oil patch.

How much are they offering to lease and to buy?

Update. Had a lease offer on the table for $2500 per nma that we were prepared to accept. I forwarded our prior OXY lease to them so they could see the language re: continued use ( or whatever). Never heard back from them.

Yesterday I get purchase offer from another outfit to buy the land, with all rights for $15k per acre.

This is frustrating.

Try not to sell. The multi layer levels of oil bearing strata and the micro wave technology coming on line for rejuvenating wells make any holdings in the Delaware Basin very valuable. The petroleum companies should be able to extract at minimum, a barrel of oil per square foot of surface area, that is how much extractable oilis in the ground in layers, plays, beneath the surface.

So, a royalty of ten dollars per forty dollar barrel of West Texas light crude, times 43,000 square feet per acre, is a field with a potential of royalties of 430,000 dollars a surface acre, just by reckoning with the current extraction processes available. And, the extraction processes are improving and the carbon capture and water recovery methods are also improving.

We recently found out we about 10 acres mineral rights in Reeves county. It is part of a 320 acres George R brown gave to his executives around 1960. A land man called us a few months ago, he wanted us to sign a leas, we said no. Then he offered to buy the acreage from us for us $4,000 an acre. Should we sell ?


We need to know the exact location of your 10 acres in Reeves County. Location in the County can make a difference. Can you share the Abstract #, Section and Block #?

Another question......Do you also own the surface acreage to this 10 acres?

Clint Liles

We have an option of a 5 year lease or a 3 year lease with OXY. As expected, the 5 year lease bonus is almost double.

What are the pros and cons?