This is concerning Block 34, Section 74 in Ward County, TX. My questions are: 1) Has anyone ever been approached to do a deeper depths lease? 2) Any idea what the bonus amount maximum might be in that area right now? Sure would appreciate any info available. Thanks. Linton
One way to find out what bonus rate is being paid would be to go to the courthouse and look for new leases filed covering Section 74 and other sections in Block 34 contiguous to yours. That means, look for leases covering land in one of the sections that share a boundary with Section 74. One of the clerks there might be able to show you how to do that, since their records for the past 5 years (at least) are digital now. Then find one that specifically states in the legal description that it only covers “depths from XXXXX below the surface down to XXXXX.” Then look up the Lessor in Whitepages or “Google” them, and verify with the address in the lease. I know that’s a lot of work, but I can’t think of another way without spending a whole lot more money.
Just FYI, so you can see the activity going on around your land, I’ve captured a screen shot of the Texas GIS map covering Section 74 and the surrounding sections. It’s attached. Just so you have an idea of what might be going on out there. I see in the TRC website that Diamondback E&P LLC got a drilling permit approved last month, for Coldblood State 7372 Unit 1WA (TRC Lease #49917), to drill a horizontal in Section 73 next to you, in the Wolfcamp. But whoever wants to drill a “deep” horizontal in Sec. 74 will probably hold off filing for a drilling permit until that have all of the leases signed, or farmouts negotiated, that they need.
Ward County Sec. 74-BL 34 Well Map.pdf (114.0 KB)
Thanks for your detailed response, Marsha. I’m no expert, but I think mostly what you find filed these days is a Memorandum of Lease, which as I’m sure you know, does not include the particulars. I’m not from there, so it would require me to hire someone, at great expense, I’m sure.
I do have holdings also in the Diamondback Warmblood, A-1324 and A-1328, 7372 1WA, permitted 11/17, and more in Secs 95 and 98, so I’m pretty familiar with the area. I’ve just never been approached for a deeper depths lease and that is, specifically, what I am interested in. I’ve been told prices, TO LEASE DEEPER DEPTHS, range from $2,500 to $25,000. I find that latter number ridiculously high, but I really have no idea. So I was hoping someone could/would give me a ballpark.
But, I do thank you for your input. Thanks!!
The bonus for deep rights will depend on what specific depth and formation are open for lease. Have the deeper rights expired under your current lease at the end of the CDC? So part of the Wolfcamp is open or only depths below a specific formation? Or was your other lease limited to depths between XX feet and YY feet and so all depths below YY feet are open? Or is this a top lease which will only come into effect at the point in time that another lease expires and only for the then-open depths? You will certainly get a higher bonus for the B, C and D Wolfcamp than you will for only the C and D Wolfcamp because at this time, operators are focused on the A and B Wolfcamp.
Hey TennisDaze, good to hear from you!! Nice to see a familiar face, as it were!!
Here is the language I think applies in my lease:
For either oil or gas wells, a Producing Unit shall be limited to those depths from the surface down to 100 feet below the deepest producing perforations in such Producing Unit. In the event Lessee requests the pooling of a portion of the Lands and Lessor consents to such pooling, as required in Paragraph 14 below, such pooled unit shall conform to the shape, depth, size and boundary limitations of a Producing Unit as set forth in this Paragraph I I.
This is all pretty over my head, so I appreciate all the help I can get. I’ve tried to get on the new forum to research and learn, but I just get lost and give up. Thanks a lot for your reply.
It depends on the lease provisions as a whole and the terms of the DPU. Did you sign a consent letter or ratify the DPU and what did that document state about the depths? Did you agree to a lease amendment, either specifically in the consent letter or ratification? Or did your ratification consent to the all terms of the DPU and did it say that your lease is amended to conform with the DPU? You may want an attorney to review all related documents that you signed. If you did not consent to the DPU and it claims that your lease is amended, then consider that the lessee does not have unilateral power to amend your lease. Also, you can consent to include depths in the unit, but that alone will not amend your lease and the lease could terminate as to deeper depth but the depths would still be in the unit and just be unleashed. This can get complex and you have to read everything together.
As I said that is all way over my head. I had planned on letting an attorney (probably Wade) deal with the lease language. What my question is, is what is a ballpark bonus amount these days in that vicinity. I realize there are many variables that come into play, so I’m just trying to get a ballpark. I’m pretty sure I have not signed any ratifications or amendments… YET.