I am new to the business and would like some advice on how to market newly released state oil & gas leases. I own the leases to 8 - 40 acre sections in SE Wyoming in two counties. The setup is 4 sets of 2 side by side 40 acre leases in different locations They are on the outskirts of two large oil & gas producing areas and could be ripe for exploration. The leases have no oil & gas history. I believe my selling point is location.
My question is how and where do I market these and perhaps most importantly what would be the going price on leases such as mine? Being new and an investor, not a developer, would flipping these be a better option to raise working capital to purchase better located leases. I understand that if I flip them I need to sell them below market. Question is...what is market?
Another option I have considered is to trade these for mineral rights claims outside of oil & gas.
Thanks
George:
If I was in your situation, I would first do some serious homework and learn what companies are drilling near your area, then contact thier land departments to learn if the company is considering additonal leasing in your area. In regards to the going bonus rates, I would contact others who have leased minerals in your area in order to get an idea of the going rates. On the topic of trading or selling these minerals, I would not even consider these as alternatives since you will most likely end up on the short end of the deal. Your best option is to keep what you've got and try to get a good lease on your minerals. Good luck.
Thank you very much for this information. How would I end up on the bad end of a deal if I sold or traded the rights? This would be good to know as I move forward.
George:
There are alot of very smart and sly individuals in this industry that awaits opportunities to deal with individuals who are new to all of this as they sometimes take the opportunity to make some fast bucks off of someone elses mistakes. I have seen this happen numerous times in the past and I'm sure it continues today. Just beware if you decide to market these minerals for sale or trade and get some advice before signing on the dotted line.
George Wood said:
Thank you very much for this information. How would I end up on the bad end of a deal if I sold or traded the rights? This would be good to know as I move forward.
I'll definately heed your advice. My difficulty is finding out what fair market value for my leases so I can negotiate halfway intelligently at least.
Thanks again Charles.
Mike,
I guess it all boils down to location in my situation. The better location the better chance I will have. I feel that if I spread around my oil & gas and mineral rights investments I will have a better chance of hitting something instead of putting all of my money in one area and in only one type of this investment.
Why do you suggest that I don't sell my minerals? It's a novice question so please forgive me.
George, There are Wyoming groups on this forum. Click on the groups menu above, click on county groups and scroll down to the bottom of the page to Wyoming county groups. That might be a good place to start your research. If you do get any offers to lease just remember they usually have some wiggle room so don't be shy about asking for more bonus money and/or higher royalty %. It worked for me.
Michael,
I'll look into the Wyoming groups.
For the best ROI in regards to leasing, is there a lease size that is more preferable to landmen and owner than others? Should I be going for a full 640 acres or are smaller leases acceptable? I think I heard somewhere that there has to be so many acres available per well and I think it was 640. My situation is 4 - 80 acre size leases.
When a producer offers to lease your minerals do they normally lease your entire contiguous lease acreage or just the acreage they want or need?
Thanks again everyone.
George, My interests are in Oklahoma so I can only speak from that standpoint. Most leases intended for horizonal drilling are for 640 acre units. If a company was wanting to lease a specific section and your 80 acres lies within that section then they would want to lease your 80 plus whatever is owned in that section by others. Your bonus payment and any future royaltys would be paid in proportion to the number of acres you own in that section. In other words according to how many pieces of the pie you own. Say one of your 80 acre tracts has 40 in one section and 40 in the adjoining section then the company would only lease the 40 acres in the section they are interested in. If all 4 of your tracts were in the same section then they would want to lease 320 acres from you. Oklahoma has recently approved 1280 acre sections, I don't know if you have that in Wyoming yet.
Gentlemen, I first off want to thank you all for your great help and generosity with your knowledge. I'm getting a great education and it's easy to see the expertise in this forum.
If a company wanted to only drill for oil/gas thru my sections to get to where they wanted to go would I still receive an offer to lease my rights or does a company have to actually extract minerals or oil/gas from my section? I have a fellow investor that owns rental homes in Ft. Worth and on one property he owns the mineral rights. A company currently pays him approx $550/month to horizontal drill under his property to get to somewhere else. Is this common or did my friend just get a great deal?
Also, is there an online source to research who is producing around my leases in SE Wyoming so I can approach them? Is there also a source showing the producing oil/gas fields in the state? I used a GIS online map when I did my initial research and am wondering if there is another source for this info? The more I read about keeping my mineral rights and approaching the nearby producers sounds like the way to go. Since my leases are in four different locations in SE Wyoming I feel I may have a better chance than having them all in one section.
Thanks again gentlemen. This very exciting.
George:
First off, glad to hear that you are re-considering your advice not to sell your mineral holdigs. I think in the long run, it will pay off. In regards to your question about your friend recieving monthly royalty, his mineral holdings are located in the spacing unti of the well thus he would be entitled to recieve a royalty from that well. There is a website called "Eser.org" that will map your area showing existing wells and I beleive will indicate their production. You will have to plug in your Township/Range/Section to get the map.
George Wood said:
Gentlemen, I first off want to thank you all for your great help and generosity with your knowledge. I'm getting a great education and it's easy to see the expertise in this forum.
If a company wanted to only drill for oil/gas thru my sections to get to where they wanted to go would I still receive an offer to lease my rights or does a company have to actually extract minerals or oil/gas from my section? I have a fellow investor that owns rental homes in Ft. Worth and on one property he owns the mineral rights. A company currently pays him approx $550/month to horizontal drill under his property to get to somewhere else. Is this common or did my friend just get a great deal?
Also, is there an online source to research who is producing around my leases in SE Wyoming so I can approach them? Is there also a source showing the producing oil/gas fields in the state? I used a GIS online map when I did my initial research and am wondering if there is another source for this info? The more I read about keeping my mineral rights and approaching the nearby producers sounds like the way to go. Since my leases are in four different locations in SE Wyoming I feel I may have a better chance than having them all in one section.
Thanks again gentlemen. This very exciting.
Charles, this is a fantastic website! This is exactly what I was looking for. If we ever run across each other I'll buy you a couple of beers and a steak to go with them.
I'm going to spend time going over this website and start taking notes for my next visit to the auction or OTC sales.
Is an O/G lease holder able to collect any monies if someone drills through your lease but does not extract from it? Pardon my ignorance on this one but my thought is the drilling is disrupting your underground minerals and possibly pushing some of them onto the adjoining leased land. Is this a possibility?
Thanks again Charles.
I'll buy everyone a beer and a steak.
George:
If an oil and gas operator drills under your mineral acreage, they will be retrieving the crude or gas underground and you will receive royalties. The situation you discribed does not occur (at least to my knowlege) unless you are referring to pipeline running across someone's property (this refers to a surface owner) whereas the company would negotiate a dollar amount with the surface owner.
George Wood said:
I'll buy everyone a beer and a steak.
Charles, I think it does happen rarely that an operator drills a wellbore under someones unleased property and simply does not perforate and complete in that area, that someone would not share in royalty. Given the option with a small amount of acres I would want to be part of the well in Texas as I think I would suffer some drainage if they perforated and completed just outside my property. I don't think the operator would be paying monthly for such an easement, but a one time fee. I would think the most likely scenario would be drilling around urban areas. They may have to drill from offsite, because you have to put a rig somewhere.
charles s mallory said:
George:
If an oil and gas operator drills under your mineral acreage, they will be retrieving the crude or gas underground and you will receive royalties. The situation you discribed does not occur (at least to my knowlege) unless you are referring to pipeline running across someone's property (this refers to a surface owner) whereas the company would negotiate a dollar amount with the surface owner.
George Wood said:
I'll buy everyone a beer and a steak.
In some cases the verticle will be drilled in one section but the horizonal and perforations are in an adjoining section, so the surface owner where the hole is drilled would recieve compensation for surface damages but not share in the royaltys. I'm just speculating that if George's friend is getting a set monthly payment it must be for surface damages, water usage or some type of usage of the surface or the drilling may be a detriment to the value of the rental property. Sorry if this is repeticious, R.W.'s post came on as I was writing mine.
The only instance that does come mind regarding this scenerio, is when a company drilled from an individuals property into an area under a public lake. Again, this is news to me for this type event to occur but I can see both of your points. I would question whether or not the company doing the drilling would have to have a lease on the property being drilled on.
Don't sell you minerals period! Why don't you get real good legal descriptions of the mineral interest and plats and then list them at no charge on this sight?
Walter,
I'll do that. I have all the documentation and descriptions of my leases. I didn't realize that I could advertise on this site for free.
How do I start pricing these leases or do I just advertise them as available for lease and see what the offers come in at.
George:
First, be sure to go to the top of the page and list under "Advertise". Second, you can list the way you want but I would describe the mineral property (County/Township/Range/Section). I would leave out the price as I would negotiate this and other parts of the lease with the interested party.
George Wood said:
Walter,
I'll do that. I have all the documentation and descriptions of my leases. I didn't realize that I could advertise on this site for free.
How do I start pricing these leases or do I just advertise them as available for lease and see what the offers come in at.