Kingfisher Dalwhinnie 1605 2-31MH well 31-16N-5W, request for 3 more wells

We have 10 acres in this section and haven't received royalty payments on the well yet but Oklahoma Energy Acquisitions have applied to the OCC for approval for "increased well density" to drill 3 more wells to adequately recover minerals (oil/gas). Does this mean we'll get additional/larger payments and increase the value of our acres if those wells are approved? I see the original production on the Dalwhinnie is about 490 BPD which seems fair.

Yes, the additional wells will mean more royalties for you and as far as value, the operators probably already know what the potential for your land is worth. They just haven't offered it.... so nice to hang onto at this point.

Hi John,

I assume you saw 490 BOPD on the well's 1002A. I would pay very little attention to that, if any. Without some very specific knowledge about modern HZ completions and flowback procedures, it will be very difficult--impossible, actually--to make any accurate predictions about ultimate recoveries based on one 24-hour test result. What that test on day 1 of flowback? What choke setting did they use? What was the flowing casing pressure? What was the water cut? How much gas was it making, and how rich was the gas?

But besides these things, the most important thing to know is trends, which you can't get from just a single data point.

Anyway, yes, if the subsequent wells are approved, you'll get more money. However, density drilling in the Osage is very, very new. The Osage has a totally different lithology than the Meramec, even though they are both Mississippian rocks. The Osage in that area is normally pressured with high water saturations and much lower potential for density drilling. I have been looking at OEA's (aka Alta Mesa's) aggressive density drilling plans in that area and am skeptical it will work financially. If Devon and NFX and Continental are seeing their parent wells outperform future wells by 40-50%, I would expect something more severe in this rock.

Not trying to be a Debbie Downer, if you have a royalty interest, it's all money to you. It's just a matter of how much and when. Unfortunately, that far NE, you don't have the reservoir pressure that mineral owners a few townships west and south enjoy, which MAY support 8+ wells per section.

$0.02

Thanks for the info. For now I’m going to just sit on it and see what the 6 new wells will do when completed.

Gastar Exploration has some excellent displays in their most recent presentation in May.
http://ir.gastar.com/static-files/b43cc2d8-29cd-4■■■■-d271f3d7bf11
If the link doesn’t work, then Google Gastar Exploration investor presentations and work your way to the presentation.
THis is the link to the OCC density hearing exhibit. Gives the predicted returns for the first well and the future wells. I always save these in my digital files.
http://imaging.occeweb.com/AP/CaseFiles/occ30035418.pdf