I have held a lease from Osage Oil and Gas since the end of December, 2020. I have not signed nor rejected it as of this date. (21-6N-4W) There has yet to be a Pooling Order issued on this tract. And according to the Landman, the Pooling is still a ways off. I intend to lease (or pool) at 1/4.
Q 1 - Is it prudent to not sign a lease before the Pooling Order is issued? My lease has not yet been reviewed by an attorney.
Q 2 - For those of us that live outside of Oklahoma and have no contacts in Oklahoma, finding an attorney to review my lease is like my throwing a dart at the yellow pages. I have no idea of what is a fair review and/or negotiation fee; what’s involved on my part; what’s involved on their part; and so on. I’m sure there are good and experienced ones and some that might be “not so much”. I understand that those that respond here cannot give out referrals, but is there somewhere that I can go for this advise?
Q 3 - Does the rep that sent out the lease from Osage have the final thumbs up or down in any negotiations? In other words… who am I dealing with? I know I am not alone in this fog. Thanks, N
Let me address no. 1 & 3.
The pooling order is to incorporate the best terms as in bonus and royalty in the section involved and the eight sections surrounding the unit. So, if you wait, you will get the best terms available. However, it is not that simple. A. If you are pooled, you don’t get the opportunity to negotiate terms such as post-production costs. B. It is always possible that the landman was asked to lease several tracts of land. The oil company then may go out and drill a very marginal/lousy well. If that happens, then they may not ever drill or pool your tract of land. If that is the case, you end up with no bonus. Cash in hand vs. getting more (possibly) later on.
3. Osage is a brokerage company…They have been hired by an exploration company to lease the lands. The oil company is calling the shots. They are the client who hired Osage to lease. Osage does not have the final say. they are subject to what their client will agree to.
OK. Thanks for that!
So, why would anyone sign a lease before a Pooling order is issued? If one has 20 days to make a decision, wouldn’t the top bonus be set at that point? At the very least it would be a place to start (?).
My lease was issued at the very end of December. During that month, oil prices were at $30 to $34 per
B, and Casillas would not entertain a higher bonus than the $375 offered. Even last week, the landman told me that the bonus was (is) lower because of the “oil climate”. Oil is now almost doubled in price since last December and long term outlook is good. I cannot see a downside (other than the 20 day period) to waiting for a pooling order to be issued. Am I right? I have high anticipation that Casillas will indeed drill this area.
I do understand that initial monetary gain is not all that is important in a lease, but at least I have time to figure out #2. (with a little help) And get my ducks in a row.
Again, the reason one might sign a lease before a pooling order is issued is because the company may ultimately decide to drill or pool your section.
Put another way. A and B are both mineral owners in Section 2. A leases to oil company. B does not and wants to wait for pooling order. In the meantime, a) oil company decides to not drill in Oklahoma, b) oil prices collapse, c) a well got drilled in Section 1 and oil company now doesn’t like the geology in the area. If either one of the three happen, A has money in the bank. B does not.
On a related subject, are you sure that Casillas still wants to lease in this section? Casillas has been rolled up into another company and the new company may go in a different direction.
Contrary to popular opinion, values for oil & gas leases have nothing to do with the price of oil or natural gas and everything to do with competition. The prolonged low prices bankrupted many companies and others are not ready to spend like drunken sailors so there is not as much competition as there used to be.
As for waiting for a Pooling Order, there must be a Pooling Application first. There are no guarantees that Casillas is going to drill Woodford wells. Due to the fact the Mississippi formation is already HBP, leases that can only cover formations below the Mississippi have far less value based on that alone. Toss in less competition and you have depressed leasing prices. There are always independent markets for leases that will be superior to those offered under Poolings, but the mineral owner must find those markets. Not all transactions are made public, so to speak, so Poolings don’t always include those unknown values.
You can check this site under directories to locate an attorney that can assist you with #2. The amount of acreage that you own will determine whether that is economical or not, but lease terms can last a long time if there is production so getting those right is important.
As for a downsize of waiting for a pooling, what if it doesn’t happen? If you have substantial acreage, that lease bonus money could be valuable.
Unfortunately, due to the nature of people and this business, there is no right answer for everyone.
I guess one can never be sure of anything… but I know some folks that have already leased and have gotten their checks. My assumption is based only on the fact that Casillas has already paid out many thousands of dollars of bonus checks.
Mr.T, I think you had said that you had a working interest in section 21 or 28, so you might know the answer to this. Can you tell me if Osage is the only outfit that is offering (or is allowed to offer) leases in these sections for Casillas… or are there others as well.
I have an interesting reason to ask this… but probably not (but perhaps should be) appropriate to discuss in this public forum. However, I would love to share with someone knowledgeable leasing our area.
Advise you give is always greatly appreciated and it does help! N
I have no knowledge of or for whom Osage is buying as there are no new leases filed with Osage as the Lessee and no recent assignments from Osage to Casillas. There is no public way of knowing what contractual relationships Casillas has with any of its lease brokers.