Is anyone getting a Royalty on a producing well in our area?

It's been interesting reading the posts on lease offers in the area. I have 100% of 60 a/c undivided In Township 24 South, Range 18 East Section 33. I have no idea where it is other than my guess from researh is that it is in the Pyramid Hills area. I have been offered a similar lease as the rest of you at $75.00 per a/c ($125.00 after 5 years) and 17.5 royalty. Leaning toward signing because it appears fair compared to other offers.

Of course my biggest question is drilling and the royalty payment. I have failed to find any paying wells in the area. Is anyone aware of any paying wells in the area and if so how much do they produce. So far it appears the land men are just buying up all the leases they can and have no specific plans to drill.

Any info is appreciated

John Baker

John:

According to the Division of Oil, Gas, and Geothermal Resources (DOGGR), there are several producing wells in the Pyramid Hills field. From my cursory view, they are not barn burners, however. It is my understanding that this is another area where the oil companies are looking to increase production and are taking new leases in order to give themselves additional land to drill horizontal wells.

The leases that the oil companies are taking are the start of the project. They need the land first. They will then conduct seismic surveys of the land to get a more accurate idea of where the formations are and the best locations to drill. Then they may have to conduct environmental studies if these locations are in areas where there is not previous production or it significantly expands that area. Thereafter, they can begin to drill. Thus, it is a process and not one that will go extremely fast. In your case, however, they may be able to streamline it since your land is within a known field.

I am reluctant to say anything about your offer because I do represent oil companies as well as landowners. And, some of the oil companies I represent are in your area. But, it appears that you have done your due diligence in this regard and know whether or not it is a good offer.

I wish you well in your endeavors.


Jean M. Pledger, Esq.

EHRLICH PLEDGER LAW, LLP

661.323.9000

Thanks for the info Jean, I really appreciate the extra mile you went in helping me understand the process. Maybe down the road I can return the favor, if not with my own lease but others I may come into contact with.

John Baker

702-■■■■■■■■

Jean Pledger said:

John:

According to the Division of Oil, Gas, and Geothermal Resources (DOGGR), there are several producing wells in the Pyramid Hills field. From my cursory view, they are not barn burners, however. It is my understanding that this is another area where the oil companies are looking to increase production and are taking new leases in order to give themselves additional land to drill horizontal wells.

The leases that the oil companies are taking are the start of the project. They need the land first. They will then conduct seismic surveys of the land to get a more accurate idea of where the formations are and the best locations to drill. Then they may have to conduct environmental studies if these locations are in areas where there is not previous production or it significantly expands that area. Thereafter, they can begin to drill. Thus, it is a process and not one that will go extremely fast. In your case, however, they may be able to streamline it since your land is within a known field.

I am reluctant to say anything about your offer because I do represent oil companies as well as landowners. And, some of the oil companies I represent are in your area. But, it appears that you have done your due diligence in this regard and know whether or not it is a good offer.

I wish you well in your endeavors.


Jean M. Pledger, Esq.

EHRLICH PLEDGER LAW, LLP

661.323.9000