Have interest in 5-20N-8W, 8-20N-8W and 9-20N-8W. Any information on companies currently leasing in this area and if so current offers? Thanks!
Griffith Land Services, Fenter Energy, Dragonslayer Energy, Chisholm are in the general area. Offers are not generally public unless someone on the forum posts an offer.
5-20N-8W. Gastar last pooled in Jan 2018 for $1500 3/16th, $1000 1/5. General idea of what was in the last 18 months.
My brother and I own some land and minerals in Section 1, Township 24N, Range 6W in Garfield County, OK. Our current lease was originally signed in 1974-1975 and is still producing; however, very little. I recently sent the Operator a request for a release of our lease with him. We then received a call this past Friday from someone that would like to drill on our land. He is aware of our current lease and stated that he would pay a 20% deposit and the remainder once he finds out that he is able to drill. He talked about taking Operators to Court to prove that it is not a Commercial well and the further steps needed to get the Operator to plug the current well. I hope that this makes sense but this is all new to my brother and I and we would really appreciate some advice.
Thank you so much Heather
Also, do you know of the current leasing activity in this area?
The new person is asking for a top lease. I am not a particular fan of them. Uploading an article about the issues. Some folks are fine with them. A really good old lease at 1/8th or 3/16ths may be better than some of the new leases. It would depend upon what it says and what the new one says. I usually let leases run their course and do not do top leases.
There have been four Lease amendments in section 1 recently, but no new leases. (Since held by production, they can’t lease).
There are horizontal wells around you, so that is good. I would let them do the legal work first and then lease if it were me since I am rather risk averse.
Are you in the Thompson well or the Richey well?
An Overview of Recurring and Related Issues Involving Top Leasing.pdf (210.2 KB)
Thank you so much, Martha! Yes, we are in the Thompson well. Is that a good thing or not a good thing? If we are being held by production, how would we let our lease run its course? Also, how do we go about letting them do the legal work first and then lease?
Gas wells can last a very long time at low rates. That well probably has some life left in it. The “new” operator would have to go to court to get the well declared uneconomic. Varying rates of success at actually getting it done. It can be rather hard to get a well declared uneconomic. They would have to get lots of data collected on the costs to run the well versus the revenues. Professional expert witnesses to testify, etc.
To let the lease run its course means that you are in the secondary term of the lease (held by production). If it is a very old lease, it may not have any verbiage regarding “economic quantities” in it, so may be hard to break. You just have to wait it out.
Read the article I just sent and it explains what could happen if you top lease. A top lease is a lease that only starts when an old lease expires, but it prevents anyone else from leasing (perhaps at a better price). Some folks like having the extra 10%-20% and maybe never getting the 80%. I just don’t like to tangle things up like that.
Some questions to ask the “new” guy. What reservoir would you drill? What is the sourcing of your funding? Do you currently have the money to drill and complete it and pay the legal fees and leasing fees? What is your intended time frame? How many other folks have you been able to top lease? Are you drilling a conventional well or a horizontal well? You need a good operator to drill horizontal wells. One in particular in that area is currently in bankruptcy, so might not want them in the picture until everything is settled.
Thank you so much for all of this great information! I will be able to share it with my brother and I know that he will appreciate it as well! I have started reading the article, great information there too. Thank you, Martha!