Hughes County Oil and Gas Lease Offer

Can anyone comment on any new activity in Hughes County, OK.? I received an offer of $350 per acre and 3/16 royalty, 3 years, in reference to E/2, S/E4 of Sec. 11 Township 7 north range 9 east. The offer comes from Continental Land Resources in Edmond, OK. Any dealings with these people?

Thank You.

Trying to work out the terms with them in 2-6N-9E, 5-6N-9E and 3-6N-9E. Have not discussed lease bonus amount yet. Thanks for the info. Yes, I have leased with them in the past. I don't have any complaints.

Make sure you get no deductions at all, not "enhanced" or the post production costs will potentially cost you a lot.

M Barnes ... that is precisely why our negotiations have stalled. Dealing with this with more than one company right now, and they have hinted at force pooling me. Total of 7 different tracts right now. Very disappointing that they are playing this way ... especially since my previous Exhibit "A" gave them reasonable latitude and they have opted to deduct 40% of my gross revenue

It is my understanding that Force Pooling has no deductions if done since May 2012. I go that route if I can't get the lease I want.

I don't have the statute at my fingertips at the moment since I am on a business trip, but it was legislated. Super important in gas prone areas! I have some old leases that the post production charges are 80% of my royalties.

I missed that one! Will have to pull the one OGL I got leased on and check the date. Thanks so much!

My comment only pertains to Force poolings. The terms of a signed lease have their own clauses which rule for them.

M Barnes, in agreement. We are talking force pooling not previously negotiated. I’ve been advised of the following: "They MAY deduct post-production costs.

New Dominion v Parks Family, 2008

"The Commission stayed within its bounds in defining its order. It clarified for the parties its intent-the phrase “normal 1/8 royalty interest as defined by 52 O.S. Section 87.1(e)(1977)” permits deduction of post-production costs; specifically, under the pooling orders at issue, New Dominion may deduct transportation, treatment, and onsite compression after production to the surface in calculating any royalty owed to Parks Family or other royalty owners in the other wells”

I have producing minerals in wells that Petroquest is the Operator. The gross purchase price for natural gas in these wells has been $2.50MCFG. Forget about what MCFG stands for. The important part of my message is the % of the price deduction once post production costs have been removed. Our price of $2.50 was reduced to $1.85. That represents a 26% price reduction. 2% of the 26% is Oklahoma state wellhead tax. Having been a Landman for years and a mineral owner, I believe an interesting counter offer to the oil and gas companies that want to lease your minerals would to include a clause that the post production costs in no event would be greater than 10.0% of the gross wellhead price. This 10% would not include any state taxes. To me that seems like a relief to an oil companies accounting department to have a fixed maximum % that can be charged. This 10% will not be used if the post production charges are below 10%. I don't see that ever happening. Explain it to the oil company like this,"now there is no transparency from Purchaser to Operator, and Operator to Mineral Owner. Thus we have class action suits filed. A fixed % ceiling of 10%,would provide the lacking transparency and have a more predictable revenue stream for the mineral owner.