I own mineral interest at N/2 of Section 26, Blk. 32, T1N (approximately: 34 mineral acres). Rock Oil signed/paid for an 18 mo. lease (expiring on August 15, 2017). They drilled a horizontal well during the later part of 2016 and we have been receiving royalty payments (which have been going down each month since original production royalties). A family member recently sold shares at/around 12,000 (give or take - think it was a bit more) and took the cash payout.
My question is:
1) Is 12,000 per mineral acre a good price? Or, should we ask for me (with producing well on the land).
2) How do I find production reports since the well was drilled? Is the formula of multiplying the average daily BBL by 30 or 40 a good formula to consider when thinking of holding on or taking the cast payment?
3) Our land was one of the places that SM Energy acquired at the end of last year. We were told they would be drilling a second horizontal well on our land - but, we haven't seen any movement in 2017. How do I determine if one of the permits that SM Engergy is for a pracel of our land?
4) Is there a way (RR commission site) to identify the proven reserves on the well that is currently producing?
Brandi - there are five or six permits involving your half-section. $12,000 is definitely much too low to sell. The formula of multiplying by 30 or 40 is also definitely not a good one to use. You own a great asset with that many acres. Congratulations!
Brandi,
This link is to Production Data on well 38640/Lease 47806/Lease name;Wiley Bob 26-23A:
http://webapps2.rrc.state.tx.us/EWA/specificLeaseQueryAction.do?tab=init&viewType=prodAndTotalDisp&methodToCall=fromGisViewer&pdqSearchArgs.paramValue=|2=03|3=2016|4=02|5=2017|103=47806|6=O|102=08|8=specificLease|204=district|9=dispDetails|10=0
There are 3 permits for new wells beginning in Section 26 and ending in Section 23 by SM Energy/API 227-39016-17-19. These wells are in the Eastern part of Section 26.
GIS Map of Howard County Section 26/Block 32 T1N and surrounding area:
CLICK ON MAP TO ENLARGE
Clint Liles
Hi Brandi -
I agree with Marcus - $12,000 is too low. Unless you have some drastic need for the money, you may want to hold off for a while on selling. The offers will keep climbing.
Also, a lot of these high offers are based upon if you own 100% of the minerals and no royalties have been sold or reserved. The $12,000 could end up being substantially lower. You should always have the fine print looked at by an experienced Oil and Gas Attorney.
Attached is some information I have put together on the Wiley Bob 26-23 A No. 5WA, which was completed 3/5/2016 and initially tested at 856 Barrels of Oil and 708 MCF of Gas a Day. It is now down to 130.1 Barrels and 144.5 MCF a day, but should level off for years to come.
I have also attached and will send in a second message information on the other 4 Wells that SM Energy has filed Permits on. Note that they go up to Well Number 12 - that appears to indicate that they are going to be drilling at least that many total.
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
391-MAPSTABLE.pdf (152 KB)
392-4222738640SMENERGYWILEYBOB2623WANO.5H.pdf (1.23 MB)
393-4222739016SMENERGYWILEYBOB2623BNO.10WA.pdf (249 KB)
Brandi -
The formula that I was taught is to take the average of the most recent 3 months worth of royalties and multiply it by from between 36 months and 60 months, depending upon the projected remaining life of the Well(s). In the case of these types of Wells, you would use 60 months.
The RRC does not have records regarding proven reserves. At least, not that I've ever seen. Those types of figures are prepared by Petroleum Engineers and can vary from Engineer to Engineer, depending upon their individual Interpretations.
Hope this helps -
Charles
