Pertaining to the Gregory 2H, 3H, 4H and 5H. All have been drilled and as of Sunday the 17th the only location that can be seen, and I have pictures of, is being fraced or 1/2 the trucks and heavy equipment in Okla. has no other place to park. Roads are really pretty good. Dusty, but aren’t they all.
After the 2 rigs, Cactus 155 and 154 were pulled off from drilling the Gregory 28 wells on 3N/4W, I ventured past the only location that can be seen from sec. line to the next and only other location I could get to. On both locations they has
Clint, Thank you very much.
OCC requirement is 30 days upon completion. It does not always happen on time. There is also a lag between the time they file it and when the OCC accepts it. In conversations with the OCC, I know they are behind. I have seen about a 4-5 week lag recently.
I will continue, hopefully. On both locations they have set 12 tanks on the tank batt. Won’t do it again. Dang near got run over by a tractor. I mean a BIG tractor.
Lyden, thanks, I have pulled the two unitization plans from Pangaea so I have them. Thanks again for helping with part of my confusion!
Chris
Richard, when thinking about bad roads I was thinking the Gregory was off of the same Garvin/Stephens County line road that the Mashburns were on but the Gregory is actually on the next road north of there, right? If that’s the case they may have part of the frac trucks for your wells parked on the Sublett as there were a HURD of them parked up there just now when we pasted. Well, Preston said he guess they were frac trucks (they were Gray and not the Red One of Halliburton, etc. we’ve been seeing) but we couldn’t see on top of that hill very well and I was trying to get Preston back from his dentist appt. in time for him to tee off so we didn’t slow down and check. lol 12 tanks on one location??? Wow, they must be expecting a whole ship load to come in with those wells!!! That would be nice, huh?
Linda, Those trucks on the Sublet are also parked on the Gregory 1H-28 that was drilled from S/W corner of Sec. 21 3N/4W about 6 months ago down in to sec 28. and are also the same company that are on the location fracing the 2H-28 or 3H-28, don’t know which, that are drilled from N/W corner of sec 33 3N-4W. Sign on the door of trucks is Cg. whole passel of them.
Mention was recently made of releases being filed when a lease ended. I don’t believe I have ever seen a release. Is it important to have a release filed to confirm that a lease is no longer holding a mineral interest after production ends or the lease expires w/o production?
Correction; The trucks on the Gregory 1H-28 location are Weatherford and the sign on the grey trucks is Cj. Some of the Cj trucks are now gone from the Sublet location.
Well, we didn’t really think that the frac trucks were there to use on the Sublett as it’s already on production and up until the last few days has had a flare burning the gas (off and on). That’s why we figured they might be there for the Geogory or some others around there. Several times Newfield has allowed Halliburton and probably others to park on the location of Branch #1.
Chris…We may have confused you about releases. We were probably talking about the oil companies exercising their option to lease again (or re~lease) but when we write that it sounds like we want them to release some minerals so that we might re~lease them to someone else. And in some instances that IS what they are talking about (I know VERY little about doing this process but I’m trying to learn from people on here). Yep, that’s confusing! Sorry!
Chris, yes it can be important to get a “release of lease” if the lease has expired with no drilling and no production. This allows you to lease again with another company. Just keeps the title clearer. We also do it for tax purposes. I cycle through our “leased” properties in January every year and see which ones should have expired, check all my online resources to see if anything was drilled, back in FP hearings or if operations are legitimately continuing and then write a letter to them asking them to provide confirmation that the lease has expired for those that qualify. I can get back part of my 22% OK depletion allowance that was taken out of the bonus when it was leased. Some companies will send a copy of the Quitclaim deed; others just send a letter.
We have to file a Schedule 7 (Bonuses on Sale of Leases and/or Force Pool Bonuses) income statement and a Schedule 8 (Depletion taken in Prior Years on Lease Bonuses or Force Pooling being returned to income) so I just keep a rolling list. As leases move off of 7 and are either drilled or not, they move to “producing or HBP” or move to 8. I don’t always move them immediately. I usually give them about a max of three years to finish up if not much is going on in the area. If the area is heating up, then I stay on top of it and make them “release the lease” according to its terms.
I put the letter/Quitclaim in the file folder and classify the tract as “unleased” again.
We never take the 2-year option on any lease offer, so we can take advantage of current market conditions. Sometimes they are better and sometimes they aren’t, but we aren’t tied up for 5 years.
The situation Chris describes does come up. Sounds like a question for Rick.
or Martha!
I get the “release of lease” so I have a paper trail for both title and tax purposes. I want my money back from the state if it is dry or never drilled! I think it is really a credit on my taxes, but every little bit helps. Grandpa and Mom had it in their standard operating practices, so I just keep doing it. Some of our leases have “continuing operations” clauses, so they can keep drilling and completing for years after the primary terms. As long as the money comes in from production, I am a happy camper.
Martha, thanks for that very complete answer! I gather it is not standard practice for the operators to send a “release of lease” unless it is requested so that becomes an important item to track, as you do.
Has anyone done much digging into the risks associated with leasing to someone other than the operator on these recent big wells?
As I have mentioned, it seems common when NFX, CLR or other majors start leasing and especially when they get closer to drilling doing spacing and pooling orders, that these 3rd party lease offers come in (i.e., JP Drilling, Greenstar, Stamps Brothers, etc.). Often the lease offers are much better than the operator will give even in pooling – I’m seeing significant bonus and 1/4 royalty pretty frequently.
I’d like to take these offers in some cases but I worry that this introduces some real risk. If the 3rd party plans to participate, it all works as our 1/4 royalty is factored into all that. But, if they default on the pooling order at any point (first well, operation costs, subsequent wells, water injection wells, etc.) then it seems like the 3rd party may be put in a situation where the operator is paying less than 1/4 so they make no money and where does my royalty come from?
I realize my scenario in the above paragraph is a little all over the place. And I may be just making up a problem that is not real. I’m just trying to get a sense whether others here have thoughts or experience on this front. I’m going to talk with a couple of attorneys about it but always find your input helpful before those discussions.
Chris,
I’ve wondered some of the same things. From everything I can see I believe the risk on the mineral owner’s end is minimal or non-existent.
This may be a very good question to ask in the General Oil and Gas leasing forum but make sure you use “Oklahoma” in the title.
Chris,
I believe there is no problem with your lease…it is valid, but if the terms are not as good at the pooling the company that leased you can lose out on trying to participate using your lease. Luckily your money will come from the operator and not the company that leased you.