Hi - we inherited mineral rights and aren’t very familiar with the process. We thought all our land was leased so this was a surprise. Is it safe to assume that they did their research and this land is not leased? Thank you for your help.
We cannot help unless you give us a state, county and location.
Your lease may have had a depth clause and you are open at a different level. Or you might have a different parcel that is currently of interest and not leased.
Personally, I would not assume that everyone does their research well. Sometimes offers are just bulk mailed without title work being done.
If you care to share more information, we may be able to help point you in the right direction.
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Thank you! It is in Colorado, township 7 north, range 63 west 6th pm Weld county Section 27:SE/4. Really appreciate your help!
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You may have been leased at some time, but the old shallow wells that were permitted to be drilled have been cancelled, so the lease has probably expired. The next set of wells were eight horizontal wells planned by Chevron. They were permitted in 2018, and have also been cancelled. Those leases have probably also expired since it is now seven years later. Hence, you are probably now open to be leased.
I do not see any leases filed in 27 yet, but there are quite a few in 28. Several companies are leasing. I see a range of royalties from 1/6yh to 21.5%. I prefer the highest royalty, especially with horizontal wells as they can last decades. Would be wise to get a good oil and gas attorney to review any draft lease as they are rarely in the mineral owner’s favor.
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We had it reviewed by our oil and gas person and she says its held by production OGL 3687535. Does that mean anything to you? Thank you.
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Ask her to explain what the number means. It may be a lease code at the county courthouse, or it may be an internal company lease number. Ask her where she found the information and what wells are holding the lease. Ask for how to find a copy of the lease for your files.
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Will do, thank you so much for your help
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How do you find a good oil and gas attorney? Does it really make sense to pay for you if you have really small interests that don’t normally pay more than $150/yr?
Also, how do you find out so much information? Is it a paid service that you have for most of that?
I look in the bar association listings for specialists and ask ask around for recommendations. A few were just given in another post for you.
If you are judging royalties from past vertical wells, they are not necessarily a good comparison for horizontal wells. Comparing a vertical well which might have 100’ of perforations to a horizontal well with 5000-15000’ of perforations is very different. For me, investing in an attorney to get a good lease makes me more money in the decades that the well or wells may be online.
I have been working in the oil patch for about 50 years, so have professional knowledge and I also rely on the state oil and gas commission web sites and a subscription service to find information.
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The optimal leasing decision is difficult and personal. My preference is higher royalty and less time, but I manage several properties so patience is a greater component in my decision process. Since your property is in CO you have the benefit or hinderance, depending on your view, of forced pooling as a negotiation factor. Value generally increase the closer you get to the commencement of drilling. The development of horizontal wells is rarely a one and done event. Operators make huge investments in drilling, completion, and surface facility costs. Achieving the highest NRI of their leases is a massive factor in their economics, so they work hard for lower royalty and higher bonus terms. A typical 1280 ac unit in your area could easily have a development cost of $75M and a lease bonus cost of less than $2M. So do not be fooled when they say they cannot afford a higher bonus in a horizontal development. With that said, higher royalty is always best if they drill. Good luck.
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Thank you. We did negotiate 21% which I thought was pretty good. Permits are approved and we are bombarded with offers to buy. We definitely aren’t selling.
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