I received a lease offer from MM Engery for S/2 NE/4 & SE/4 Sec. 14-22N-4W, Garfield County, OK (6 net acres), at $200 per acre, 3/16ths royalty with a term of three years ($1,200.00 bonus). Can anyone tell me if this is a fair offer based on wells in this area of Garfield County?
Thanks - Walter
Walter i checked the Okla. Mineral Owners Registry and the lease prices for the county over the last year run from $100 to $800 bur none posted for township 22N-4W. MM Energy has been sucessful over the last nine months in the area with 2 oil wells in 13, 1 in 24, and suppose to be drilling in 25. It will not hurt to see if that was their top dollar but it does look like you would get a well drilled with them drilling next to you.
Walter, It never hurts to ask if that is their best offer or tell them you will need to think about it. The judicial process they have to go through before they can start drilling can take months. You probably have plenty of time to negotiate. Even if they start without you they still have to pay you. If you don't really need the $1200 most companies will give you the option of no bonus and higher royalty, probably 25%.
Richard and Michael:
Thanks for both of your responses. I did inquire with MM via email if they were willing to negotiate and the response I received is below. I am not sure what the term "stroke" means. Maybe it means more than 6 mineral acres? Thanks Again - Walter
"We do not have any interest in raising our offer. Perhaps if you owned more mineral acres you could have more "stroke". If you dont wish to accept these terms, we will simply let you hold your minerals unleased. No big deal. Happens all the time."
Kind of a wise a** response I'd say. Walter I don't know how familiar you are with the process but if they drill a well you will get your share leased or not. The operator is required by law to make every effort to locate and lease all mineral owners before a well can be drilled. Even if you still don't lease they must put your money in escrow. The only way you can lose is if you don't accept the offer and they don't drill you lose a free $1200. It's a bit of a gamble.
Richard, are they actual operators? I couldn't even find a website for them.
Michael all I know is that the registry is reporting that MM Energy has drilled 4 wells and drilling one other in the sections close to Walters and that they are going down around 3500 ft and producing. the main action in Garfield county is further out west and Sandridge seems to be drilling deep out there and the offers were around $800 an acre. Walter could always ask for a depth clause that way he would be open if the dreeper drills comes his way.
Michael:
I am not familiar with the process, which is why I joined the Mineral Rights Forum. I have admittedly ignored the details of this business over the years, but since I retired from the Army, I have more time to do research. I thought the response from MM was a bit arrogant. I did not expect that from someone who I thought was a professional at his trade. I don't need the $1,200.00, so maybe I will "hold" for now. I need to think about it. Maybe ignorance is bliss after all?
Thanks - Walter
Walter i do not blame you at all to hold on for now. If it comes to the point that they need your six acres to make the drilling unit they will have to pool the area and you will be notified of this action. I do not think you would lose out in the pooling because you would be given several options and i would bet you would at least get the $200 offer with thee 3/16 probably more.
Richard:
I appreciate the information in your response. I want to look into what is involved with asking for a "depth clause" on my own for now. I don't want to lean on MRF too much. If I have any questions, I will post them so others have an opportuity to learn.
Thanks - Walter
Richard Pruitt said:
Michael all I know is that the registry is reporting that MM Energy has drilled 4 wells and drilling one other in the sections close to Walters and that they are going down around 3500 ft and producing. the main action in Garfield county is further out west and Sandridge seems to be drilling deep out there and the offers were around $800 an acre. Walter could always ask for a depth clause that way he would be open if the dreeper drills comes his way.
Richard:
Thanks sincerely. I have more homework to do now, "Depth Clasue" and "Pooling." I have seen some discussions of "Pooling" here on MRF, and look forward to learning more about it.
Walter
Richard Pruitt said:
Walter i do not blame you at all to hold on for now. If it comes to the point that they need your six acres to make the drilling unit they will have to pool the area and you will be notified of this action. I do not think you would lose out in the pooling because you would be given several options and i would bet you would at least get the $200 offer with thee 3/16 probably more.
Walter,
I think you will be able to beat that offer. Most of the leases are up to twice that much if a well if near the property.
Regarding depth clauses, it means they can only go to a certain sand depth, say X sand was 4500ft, they can't go any deeper, anything below that would have to be a new lease with another bonus.
Pooling clauses mean, most of the horizon wells are spaced on 640, but their are a few with less acres. If you only own a few acres in this 640 and you don't want to lease, the OCC will let the company pool you and you may not get 3/16 and you would lose the bonus. Lets say, you own 320 of the 640, a oil company has leased everything except you 320, then they can not pool you, Not sure what % has to be leased now as it does change. But, small acres can easily be pooled.
I have property in Garfield, Noble and Logan and I think they are planning on drilling everything up. I haven't been to the farm since last fall, but I know several wells have been drilled and truck are messing up the roads real bad. One question I have? Is MM Engery drilling horizonal wells in that area? I wasn't aware MM did H. wells.
Virginia those wells drilled by MM were vertical with a depth of under 4000 ft.
Virginia Pflum said:
Walter,
I think you will be able to beat that offer. Most of the leases are up to twice that much if a well if near the property.
Regarding depth clauses, it means they can only go to a certain sand depth, say X sand was 4500ft, they can't go any deeper, anything below that would have to be a new lease with another bonus.
Pooling clauses mean, most of the horizon wells are spaced on 640, but their are a few with less acres. If you only own a few acres in this 640 and you don't want to lease, the OCC will let the company pool you and you may not get 3/16 and you would lose the bonus. Lets say, you own 320 of the 640, a oil company has leased everything except you 320, then they can not pool you, Not sure what % has to be leased now as it does change. But, small acres can easily be pooled.
I have property in Garfield, Noble and Logan and I think they are planning on drilling everything up. I haven't been to the farm since last fall, but I know several wells have been drilled and truck are messing up the roads real bad. One question I have? Is MM Engery drilling horizonal wells in that area? I wasn't aware MM did H. wells.