Lincoln County, CO - Oil & Gas Discussion archives

Oil & gas discussion group for those interested in Lincoln County, CO. Share your experience regarding lease bonus, royalty rates, drilling activity, and oil & gas news.

Need Help with Mineral Rights in Cheyenne County, CO.

My family is about to settle a trust that includes mineral rights in Cheyenne Co. and we need help in finding out what it is worth and how to go about selling them.

Thank you.

Ann Torres

A message from Jan R to all members of Lincoln & Cheyenne County, CO on Mineral Rights Forum!

Hello, Like several others, I have been contacted by Paschal Energy with an offer of $50/acre and 12.5 royalty for a five year lease with a five year option at 100/acre. From what I am hearing here, this is pretty standard. But I have always thought the first offer was always low and to never accept it? Also, how can I tell were the one he is interested in is located (I have several others, but he has not mentioned them)? It is Sec 10 T14S R47W. Where on the Niobara is this located; he stated it was on the edgeof the field, but how can I tell for sure?

In reply to the above e-mail received from Jan R -

I agree, the first offer is not their best offer!!! From the reading I have done since this began, the landmen have limited authority to make changes/offers. IF there is an oil company involved, they will come in after the landmen have picked off the "easy" ones and will then have better offers to those who hold out. Note - that is a big IF!! The landmen may be specualting on their own, but with the number of companies that have popped up, it makes me think there is some serious interest from somewhere.

Jan, when you receive a written "offer" from Pascal, the legal will be stated in the offer. If you have other tracts, I would mention that to him and ask that they all be leased as part of the deal. (However, have separate leases for each tract if they are not contiguous) I can't answer the question about the "Niobara", but I would be very interested in the answer! Perhaps others in this forum can answer that.

You can try entering your township and tract coordinates here to see them on a map. Accordig to the landman who gave it to me, it usually lets you do it once for free. I apologize, but I haven't tried it yet.

Someone took the plunge and created a Cheyenne County Group. From this point forward, this group will act as the Lincoln County, CO Group. You can find the Cheyenne County Group here:

For those locally in Lincoln County that might be interested . . .

Eads Business After Hours presents:

“Protecting your Rights in Oil and Gas Development”

by Jenna H. Keller, Esq. of Feldmann Nagel, LLC

Monday, January 23, 2012 at 6 p.m.

Plains Theatre on Maine St. in Eads

(between 13th and 14th Streets)

Refreshments will be served.

Sponsored by the Eads Chamber of Commerce, Crow Luther Cultural Events Center & Kiowa County Economic Development Foundation (KCEDF).

If you sign a contract and it is passed the 60 days are you still obligated to accept the offer? If all the papers were right is it normal to have a delay?

Ron, if you are waiting for payment on a bank draft or "order of payment" carefully read the language printed on it to see if it clearly states "60 days" or if they built in some additional wiggle room. If it has passed that stated period of time, then you have a right to terminate the deal.

However as a practical matter, the ease or difficulty in terminating it will depend on where the lease is. If you still hold the lease, simply inform them they failed to pay and it's done. If they already hold your lease, inform them you want it returned immediately. If they refuse then the real headaches can begin. So I hope you retained that lease, or they are cooperative.

There are a handul of reasons why payment might not be made as promised. Virtually all of those reasons entail bad news for the mineral owner. This does happen on a somewhat regular basis which is why folks should never deliver a signed lease to the Lessee until payment is in hand. You might want to post the Lessee's name here as a warning to those of us who may be about to lease. Thanks and Good Luck!

Mr. Charlton, if it was 60 banking days then it could be actual 80+ days. If the time of the draft/order has passed I would record a statement of non-payment and declare the deal voind. Deals in real property, time is of the essence and they must either accept or refuse, if they do neither within the timeframe of your payment instrument, they are using your lease as an unpaid open ended option. I would get a lawyer, get a statement recorded, copy to the potential lessee, so if they have your lease and try to record it in the future they will not be able to say you did not object to their not paying you in a timely manner. The sooner you act the better if the wheels come off.

Anyone heard anything new lately? Are the brokers such as Diamond, McDonald, etc... still actively leasing?

I will have my lease up in July of next year. You can now start six months early and get 10% down and the 90% when they close deal. The area has been active and looking for a good bonus. What is the latest news

I saw that Encana is drilling in T12S R56W.

Does anyone know who Encana used as their lease agent? Or has anyone here leased with them?

Hi I do not know of the lease company for encana . They do gas drilling . Iam looking for oil in my area

Jordan, Thank you. I didn't realize Nighthawk had this presentation on the web. Their map of the Lessee holdings is quite useful in seeing which companies have targeted a given area.

Regarding the

Comment by Jordan stevens frazier on October 2, 2012 at 10:47pm
Some of the worst abuses of landowner groups by lawyers have occurred in the Utica Shale in Ohio. The lawyers may be working for themselves (surprise!), not for their clients. They can make a killing on representing a few landowners.
Landowner groups may benefit some landowners, and they may not. Beware of the fees, commissions, bonuses to be paid to organizers, lawyers, etc. It is a rough and tumble world out there.
Ken G.

Hi, My name is Chad Foster. My family is from Hugo, and I have noticed small scale activity over the years when we came up to visit from Oklahoma. Last trip to Limon I noticed a small field west of Hugo. I was raised in an oil company, currently am working on my geology degree at Oklahoma State and am employed as a well test operator to pay for it all. If I can answer any local geological questions, questions about modern corporate strategy or share what I have observed over the past 20 years in the Oklahoma/Kansas oil and gas fields, I'd more than happy to toss in a couple of cents.

Chad, thanks for your offer. Access to oil & gas information in this area is seriously challenged. Any help that you could provide for us folks that own mineral interests in the area but live elsewhere would be a great help and might put some energy into this discussion board.

My family's interests are in Sec. 12-T14S-R56W ( 4 mi E. of Punkin Center on HYWY 94. There is drilling & / or operating activity within two miles to the NE and within two miles to the SW. I track location and drilling permits applied for and issued thru the Colorado Oil & Gas Conservation Commission. I try to track Nighthawk Energy ( a major player in the area ) using their website for drilling / production announcements, etc. There are numerous other operators in the area ( and seems like the number is growing ) for which there seems to be limited or no information available, website wise, if you will. I leased our mineral interests in the spring of 2012 and the title of the lease is still in the name of the leasing agent per the Lincoln County Recorder of Deeds which I monitor. So, I still don't know whether or which oil Co. was / is behind the leasing agent on our lease.

Bottom line for me Chad is that with your family's roots in the Hugo area, your interest in the area and industry knowledge, you could be a great deal of help for us on this board if you had the time to monitor the Lincoln County activity, comment on its significance, leasing activity and rates, drilling discoveries, production rates, geology of the area, etc., etc.

Thanks Chad and good luck.

Hi Allan. Something I've noticed that is alarming in the area is the leasing practices. A gold standard in Oklahoma a 2 year with a 2 year extension, a 3/16 lease, and the bonus really doesn't matter (unless you're broke or the well is dry), that is used to tempt. A successful well's run checks are the bonus. You just want something drilled, and fast, so allow yourself someone else the opportunity ( 2 years, 3 max), by not signing excessively long leases. You need to know what company is going to be operating so you can independently evaluate their success rate and determine if you want to be in bed with them( they may be crooks). If a leasing company is tying up land to flip, they are speculators, they will sell you to the highest bidder without even a kiss or thank you (and they may keep some O.R.R.I., which means they aren't leaving). Remember, you are the total boss, they have absolutely no rights until you sign, so like a marriage, add in all your terms, but be fair unless you want to scare them off. If a company has good geologists, scouts, or old hats, they won't be ( as) greedy and will want to take care of you because they aren't going to flip the deal for cash like many modern stock trading companies. They will lease your land directly too, usually. Beware of traded companies for another reason, for they tend not to reward their employees with over riding royalty, but instead bonuses, which means they aren't looking long term, but for short term cash, meaning overtime you may have numerous 'bed' partners. It will take some time for me to get acclimated to the area, and my opinions may seem rigid or outdated in some cases, but that's because I've had years to form them and one thing is for sure, . . one needs to be aware that there are more ways to loose $$ in the patch than to make it, unless you are an attorney.

Nighthawk Energy of the UK claims to hold leases on 410,000 acres, if I read that correctly. They must have paid out a fortune for leases. Their market capital was in the 40M range ( but it was in pounds, so I may be wrong here), which means they will either hit MONSTER wells, or get partners with cash to do a drilling carry for < 50 % of working interest, so Nighthawk remains in control. 46M is only enough $$ for about 20 horizontal wells done right, if the area is spaced on 640s like here. They will have eaten through their capital only after developing around 13,000 acres, and for their size of a company, that could all be done in 1-2 years. I flowed wells back for Sand Ridge the last 2 years, they went nuts, spending 100s of millions on hundreds of wells. They partnered with the Koreans and Chinese just to keep going. The average well cost 3M, and came in at 200 bbls/day. One in 10 made 500-700, and I can count on one hand the ones over 1000. They have drilled a few hundred. Night Hawk has a very small budget, a handful of employees, but it looks like a smart good startup company and I would buy stock, that said, I have a feeling many people will be waiting a long time for wells, if the 5 year/ 5 year option is true (That was a steal). If they hit some big ones they will partner up with a big boy, someone in the low billion market capital range, to develop the area or just sell the acreage and get rich. How many gas pipelines are in the area? Who are the purchasers? They can't just flare or vent. That may be an infrastructure obstacle to a lot of folks getting wells. It is very interesting, and the landowners appear to be communicating well, with that socoromineral entity. I hope everybody gets rich! and in the next decade ;-)