How do I choose a production company to lease to?

John Swain · 2012-02-26T01:25:43Z

Hello, I am new to the group and own mineral rights to a small holding in Arapahoe County (approx 60 acres) directly to the East of an area that Anadarko has been so active. (we are in 4S-63W). My family has been recently approached with an offer from CP via a land man to lease. While I am sure the lease favors them to start, it otherwise may be close to fair in terms of bonus and royalties. I understand all the reasons to review the lease in detail with an oil and gas attorney and will do so prior to signing. I have been studying the various blogs and other resources related to leasing and I'm sure that I am now just knowledgeable enough to be dangerous! I have questions related to the strategy involved in choosing a production partner to lease to. I am sure that there is a lot involved related to choosing the best company with technology, reputation, proper capitalization and all - but with the reality of pooling issues and the race to exploit the Niobrara resource, how do I really know if it is in our best economic interest to partner with a larger multi-national like CP over Anadarko or to choose another smaller independent who is quicker to market? I fear that I will get my rights caught up in some type of strategic blocking activity where a large oil company picks up our rights and pools them with others simply to keep another production firm out of an adjacent section where they are producing for some period of time. I would obviously prefer to go with the company that is hell bent on successfully producing in my pooled section. (I am just assuming that 60 acres is too small of a spacing unit to drill in independent of other pooled acreage) How do I ensure that I am going with someone that is ready to move to production in an aggressive manner within the initial leasing period (3/3 was proposed) and that they will also have the technology to produce the best yield long term? Thank you in advance for any advice you can provide! John

Colorado Mineral Rights Arapahoe County, CO