Drilling and Completion Proposal

Oklahoma Mineral Rights
1

I received a Certified Letter for a Well Proposal with 5 choices. Not sure which I should choose. Any help would be appreciated.

  1. Participate with your interest by paying your proportionate share of completed well costs; or
  2. Lease/assign your interest to Coterra for a cash consideration of $1600 per net acre delivering an 87.50% net revenue interest; or
  3. Lease/assign your interest to Coterra for a cash consideration of $1500 per net acre delivering an 81.25% net revenue interest; or
  4. Lease/assign your interest to Coterra for a cash consideration of $1250 per net acre delivering an 80.00% net revenue interest; or
  5. If you are unable to deliver a net revenue at any of the options above, assign your interest in Coterra at the current deliverable NRI for a cash consideration of $10.00.
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2

Typically, these are pre-pooling letters. Many times, even if you reply, the company will still name you in a pooling proceeding. In sum, I wouldn’t do anything at this point and wait for the pooling. Now, at such time you get a pooling order, DO NOT ignore it or let grass grow under your feet. A respondent has a 20-day time period in which to make an election.

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3

As Tim said, this is an informational letter. I do not reply to them, but wait for the pooling order and answer it immediately. I prefer the highest royalty option (#4) as a successful well or wells’ royalties over many years will far outweigh the one time higher bonus for a lower royalty option.

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