Does anyone know if there is a set or minimum number of acres required for
an oil driller or landman to be interested in exploring or drilling? We own mineral
rights on about 1200 acres in Carter County, Montana, but the acreage is divided and although close together, are not adjoining.
That is a nice chunk of acreage. You would definitely have more negotiation power then the average landowner. Of course, you would have even more power if your 1200 was contiguous. But regardless, your in a good position with that many acres. I remember during the initial phases of a leasing boom where the landmen were looking at 40 acre parcels and above during their first wave. But ultimately they will lease very small parcels if it is needed for ROW or DU completions.
The DU (drill unit) sizes are much larger then ever before because the lateral (horizontal) runs generally are a mile long. a square mile is 640 acres. Often drill units are 640 acres or perhaps even 1280. The horizontal drilling enables a single well pad (requiring only a few acres during drilling and then a very small footprint for the wellhead when they leave. So you'd want to check in your area to see if the state has defined DU size for this "new" horizontal drilling technology.
Then I always suggest to landowners to form a landowner (mineral owner) group. In your case, as a minimum you could find all the people around you to fill in the "holes" and perhaps double your acreage "holdings". There is power in numbers.
By the way, when a company comes into town and starts leasing, there are usually multiple companies doing so and they generally are trying to lock up as much land as possible; initially quietly and as cheap as possible. But it isn't at all uncommon for 100's of thousands of acres or even a million to get leased.
Those are a few of my thoughts. Good luck.
Wilson
Good information, Wilson. Thanks for your input. Tim
Wilsontownship said:
That is a nice chunk of acreage. You would definitely have more negotiation power then the average landowner. Of course, you would have even more power if your 1200 was contiguous. But regardless, your in a good position with that many acres. I remember during the initial phases of a leasing boom where the landmen were looking at 40 acre parcels and above during their first wave. But ultimately they will lease very small parcels if it is needed for ROW or DU completions.
The DU (drill unit) sizes are much larger then ever before because the lateral (horizontal) runs generally are a mile long. a square mile is 640 acres. Often drill units are 640 acres or perhaps even 1280. The horizontal drilling enables a single well pad (requiring only a few acres during drilling and then a very small footprint for the wellhead when they leave. So you'd want to check in your area to see if the state has defined DU size for this "new" horizontal drilling technology.
Then I always suggest to landowners to form a landowner (mineral owner) group. In your case, as a minimum you could find all the people around you to fill in the "holes" and perhaps double your acreage "holdings". There is power in numbers.
By the way, when a company comes into town and starts leasing, there are usually multiple companies doing so and they generally are trying to lock up as much land as possible; initially quietly and as cheap as possible. But it isn't at all uncommon for 100's of thousands of acres or even a million to get leased.
Those are a few of my thoughts. Good luck.
Wilson
In my personal experience if the geology is good, you can get competing offers on small acreage, 7.619 acres in my personal case. With more than one potential lessee, I was able to negotiate my lease offer from $100 acre and 18% to $3,000 an acre and 20% royalty in about 10 days, for acres in a good area. I think it pays to market your lease and not deal with one potential lessee because if you are only dealing with one and they are sure of it, they have no incentive to pay more.
R.W.
Very smart!!
R W,
How would one go about marketing their lease to operators? We currently have a deal one one pump on our large acreage, but would like to solicit more offers.
Thanks in advance,
Mark
r w kennedy said:
In my personal experience if the geology is good, you can get competing offers on small acreage, 7.619 acres in my personal case. With more than one potential lessee, I was able to negotiate my lease offer from $100 acre and 18% to $3,000 an acre and 20% royalty in about 10 days, for acres in a good area. I think it pays to market your lease and not deal with one potential lessee because if you are only dealing with one and they are sure of it, they have no incentive to pay more.
Mark, you need to find out the operators who are in your area, the closer the better and just ask them for a competitive bid. Depending on where you are you could be solicited here just for posting that you are unleased. At least I hope you have something unleased and not all your acreage is held by production from the one well. There are independent companies that lease and either participate proportionately to what they lease from you or they assign your lease to the operator for a profit. These independant's money spends like anyone elses but I recommend that you pay special attention to the terms of the lease. I would definitely join the group for the county in which your minerals lay. You may also list minerals for lease on the home page of this site. Hope this helps.
Mark B said:
R W,
How would one go about marketing their lease to operators? We currently have a deal one one pump on our large acreage, but would like to solicit more offers.
Thanks in advance,
Mark
r w kennedy said:In my personal experience if the geology is good, you can get competing offers on small acreage, 7.619 acres in my personal case. With more than one potential lessee, I was able to negotiate my lease offer from $100 acre and 18% to $3,000 an acre and 20% royalty in about 10 days, for acres in a good area. I think it pays to market your lease and not deal with one potential lessee because if you are only dealing with one and they are sure of it, they have no incentive to pay more.