Lease Release, S27,T8N,R8W, Grady County, OK

I am told by the well operator (Sheridan Production Co. LLC) that S27, T8N, R8W, (Well: Ray Giles Tract-73) Grady County, OK is in the North East Verden Unit that was formed in 1983 and although the well is no longer producing, the operator says since my section is in the NE Verden Unit they have no intention of releasing any portion of the “Unit”. He went on to explain that the Unit is comprised of 8,000 acres and he does not foresee that S27, T8N, R8W will ever be released even if it doesn’t have any active wells. I will also be trying to determine if S26, T8N, R8W is in the “Unit” because I have minerals in both sections (at this time S26 still has the Ast #3 well which I am monitoring to see if it gets shut down). Over the years, other mineral owners in S27 have been doing new leases. Of course, I want to do a new lease also, but only if it is legal. Question: Is what the well owner is saying correct? Is there anything I can do to obtain a Lease Release? Thank you for your time.

The operator is pretty much correct. You can look up the terms and information on the North East Verden Unit on the OCC website. It will have which horizons are held, which sections, etc. It may go back to your original lease terms and the subsequent unit lease terms. They can hold acreage for a VERY long time… Let me know if you need to find out how to get the unitization documents.

M_Barnes… that was very kind of you to respond. Thank you for directing me to information on the North East Verden Unit. I will try to find it. Update: Using the map that the operator sent me, it shows that the “Unit” is in a portion of S27, T8N, R8W, BUT the two leases that affect me are not in the North East Verden Unit. Cimerax has indicated they will be releasing our leases, but once i verify it is what I need, I’m still not sure if I can then re-lease our minerals.

I was contacted about signing a mineral lease for S27-T8N-R8W, Grady County, OK. (I think they are also doing S34-T8N-R8W). They said their top dollar was $750 an acre and 1/5th Royalty for a 3 year lease. Then he went on to say it’s going to the Corporation Commission for Pooling which we would only get $750 an acre and 1/8th Royalty. He is acting like it is urgent that we do something before we lose out. Can anyone provide any information?

Fyi… With your help, I determined that our mineral are not in the North East Verden Unit and I got a release from Cimerex when they close the last well in the section S27-T8N-R8W.

Thank you!

The pooling will usually have several options of royalty rates and bonus which are supposed to match the offers by the operating company in the current section and any of the touching eight sections within the last year. I doubt that only 1/8th will be offered, but it could happen. His tactics are common. I usually pick the highest royalty at a pooling if I cannot get a good lease with a broker. If you only have a copy of the draft lease, I doubt that it is in the mineral owner’s favor. You can either invest in a good oil and gas attorney to review it or wait for pooling. I frequently choose pooling. MK&P has filed leases in section 27 this year at 25%. Tell your broker that you know there are 1/4 leases and what are they offering.