Good Morning
I’m looking for experience in this area. Between 2 cousin’s, a niece, nephew and myself together we hold 200 nma in 12-10N-10W and is currently leased with Classic Resources (expiring in June 2026). My niece and Nephew received letter from Duncan (see attached)regarding a proposed drilling of a horizontal well running through 12,13,and 24 of 10N-10W. My questions
- If we are in a lease why would they indicate that it may not be leased and offer lease options 2,3,and 4 ?
- what exactly does option 1 mean ?
- If our lease expires in June and drilling and or production hasn’t happened then what ?
Note: We do have an attorney in Anadarko that handled
the overseeing of the lease
What did i do to make this post appear the way it does ?
This is a common “courtesy” letter usually sent out before pooling. If you want to see it larger, double tap the document and it will open in a bigger format. Hit the X in the upper right to make it smaller again.
Option 1 is for participating as a Working interest owner. Not for the novice as one would have to have deep pockets for drilling and completion costs, liability insurance, Production costs for decades, good oil and gas attorney and a good oil and gas accountant.
The other options are for the proposed lease amounts and usually are very close to the pooling amounts to come.
You can choose to lease or you can choose to be pooled. If you choose to lease, you need to get an attorney immediately to review any draft lease. They are not generally in the mineral owners’ favor and need significant edits. Most savvy mineral owner would take the highest royalty because the highest royalty over many decades of production of a well or subsequent infill wells will far outweigh a one time higher bonus payment for the lower royalty. I prefer to get a high quality lease, but if I cannot, then pooling is fine. NEVER turn over a signed lease without getting paid the same day. Your attorney can hold the lease until they pay. You do not want a filed lease without a payment in your bank.
I do not sign these letters as I do not want my signature on any document before I have reviewed and agreed to the terms of the lease or the pooling. It is common to send out a letter like this to all mineral owners who are unleased or whose lease will expire before the well will begin drilling.
Duncan just filed a pooling order in the sections nearby for similar terms within about $50. They have filed for spacing of the Deese reservoir immediately to the east 10N-9W in Oct 2025. Since no cases are filed yet for sections 24, 13, 12 I doubt that any well will be spud by June when your lease expires. They will do the one to the east first since it is farther along in the queue. BCE-MACH is also in the area with a long well already permitted for 30-31-11N-9W and into 6-10N-9W just north of the Duncan cases.
Note: If you lease, be sure and get a commencement of drilling clause in the new lease which requires a rig onsite capable to drilling to depth and drilling “to the right”. Actual spud, not a garden hose and a wheelbarrow on site as “commenced”. You also want to make sure that you get a no post production cost lease- very important in OK.
Check your original lease to see if it has a depth clause. Make sure the new one has one.
Thank you so much, this can be very intimidating for a south Texas fella.
Be sure the attorney is licensed in OK for the leasing as TX leasing is completely different from OK!
Yes the firm we used for the existing lease is in Anadarko.
Hi Ms. Barnes,
Duncan has sent my wife a lease agreement to review for S24, T10N, R10W in Caddo. As we’ve read the different replies you all have given in regards to the do’s and don’ts of leasing, and the importance of an attorney, can anyone give us a general “ballpark” estimate of having an oil attorney go over a lease, since we’ve never used one and need to prepare for the cost since we’re retired on fixed incomes. I know there are issues with this lease based on what you all have talked about
(e.g.- . “Lessee shall have the right to use, free of cost, gas, oil, and water produced on said land for its operations thereon, except water from from wells of Lessor.”
“Lessor hereby warrants and agrees to defend the title to the lands herein described.”
“It is agreed that this lease, which is a “paid up” lease requiring no rentals, shall remain in force for a term of 3 years from the effective date (hereinafter called the “primary term”), AND FOR AS LONG THEREAFTER AS OIL AND GAS OR OTHER SUBSTANCES COVERED HEREBY ARE PRODUCED FROM THE LEASED PREMISES OR FROM LANDS POOLED OR UNITIZED THEREWITH, OR THIS LEASE IS OTHERWISE MAINTAINED IN EFFECT PURSUANT TO THE PROVISIONS HEREOF.” (my emphasis in capitalizing specific wording).
Also, are we to assume that an oil attorney would know to have us negotiate or decline all these things you all have mentioned, especially what you speak about above re: commencement of drilling clause, no post production, and depth clause, since we know nothing about oil wording.
Thank you so much in advance..
A good oil and gas attorney can help you negotiate the better clauses for an oil and gas lease. Some companies will accept those clauses and some will not.
You can either use an attorney or you can wait for forced pooling which has its own advantages and is free. Most of us would pick the highest royalty choice in the pooling order. You only have 20 calendar days in which to answer the pooling. (best to send by certified mail return receipt for a paper trail).
Here are some documents that may help you.
0_Royalty-Owners-Booklet-112020.pdf (6.8 MB)
0_The Pooling Process in Oklahoma.pdf (340.4 KB)
As for attorney fees, you would have to call several firms and ask what their typical lease fees would be. I would only pick an attorney with an hourly fee, not one that wants a percentage of the royalties.
If it’s any help at all, we were charged $450 by an attorney in the area for reviewing the lease, making suggestions as to changes and providing a “hold” for the signed contract until payment was received. Not sure if that is typical or not. All changes were accepted.
I have received a few inquiries on properties in 10N-10W ($850, 20%, 3+2). I turned them down since there was no negotiation leeway. The properties are in and around the NE Binger Unit.