Virginia, They have to get the water off the Miss Lime before it can produce oil, so the initial production reports of these wells are not to be taken seriously. Also, the Woodford shale is present and many wells aren’t producing from the Woodford yet. It’s just way to early to be trying to determine what our minerals are worth. The quick and easy “old rule of thumb” was to value the minerals by using a total of 3 to 5 years of constant production from all the producing formations. However, we do not have anywhere near enough production data to sell using this “old thumb method” which is not an acceptable method of valuing minerals. By the way, deeper formations other than the Miss Lime and Woodford could also be present. Really, we must put on our thinking caps before we sell.
We should not that the 50 years is the number of years left for potential drilling, and has nothing to do with outputs of any well. I think it also revealed that there were roughly 30,000 known drilling locations actually pinpoited to be drilled. I predictmany more, and thos weaker producing wells of the past will be opened again. How deep into the Earth do these formations go in a planet of about 12,500 miles in diameter, I think that is right, 12,500 miles. Really not a big place today, but a hundred years ago it was impossible to imagine.
woops, that is kilometers, not miles. Miles it is about 7,900 at the Equator
Dwolfe, There were 2 old Mississippian wells the 1st was Diedrich 1 NE 25-19N-4w drilled in 1965 & produced 86 BOPD and the 2nd was Enmeier Vculek 1 drilled in 1977 NW 25-19N-4W & produced 130 BOPD and 200 MCFPD. Considering these were vertical Miss wells drilled using old techniques, but still had good production it’s no wonder someone wants to buy your minerals. Devon has filed Intent to Drill to the Viola depth 10832 API # 3508324130 but there is no production report yet. This information is Free on this OCC website: http://imaging.occeweb.com/imaging/OGWellRecords.aspx
M Barnes, Excellent example of Miss Lime/Woodford potential. I agree with you that we should never ever sell our mineral rights. Oil is the new gold, because if there is a short supply of oil the world’s GDP growth declines, people cut back on discretionary expenditures, and recession ensues. Here’s an analogy question: If you looked out your window and saw your fields covered in gold and people were lined up to buy your gold would you sell the gold or your entire ranch? I would lease my ‘gold’ (minerals) for at least 1/4 royalty no bonus and/or participate, keep my ranch, and save the world.
**Rick Howell, Thank you so much. I have all the clauses you mentioned and know what to omit except for the clause/s needed to address the negotiations of the formations bound by the lease. Is your wording…, “only the formations they intend to explore/develop, and/or a release of everything not independently tested and proven capable of economic production after 2-3 years on the expiration of the primary term”, part of a defined lease clause? **
Martha,
No, those are not words directly from a clause. Some may be included, but it is all general statements.
Leasing only the formations they intent to explore would be restricted in the property description. N/2 NE/4, NW/4 of Section 1 Township 10N Range 5W
Limited in rights from the surface to the base of the Cleveland Formation.
Or Limited in rights from 50’ below the base of the Cleveland Formation to the base of the Mississippian formation.
Or Limited in rights from 50’ below the base of the Mississippian Formation.
Then a standard depth clause can be included to release anything in the depths you authorize that is not producing after the primary term.
You could effectively have 2 (or more) leases open at one time.
Some words from Gary Hutchinson on the subject that I saved:
Think of the operator’s geologic risk, your objective of receiving royalty from production, and how to combine the two. The operator will risk a tremendous amount of money and take geologic and completion risk in the process. You want the operator to do that for your benefit. You don’t want an operator to drill a shallow will to a low risk zone and hold the deep formations which abound in Stephens CO for a song. Try this: require an operator to release all formations not tested and proven to be economic zones, as determined by an independent professional, back to you 2 years after the primary term. Demand a bonus that reflects your needs and that is fair to everyone. The diligent area operators will take it, the flippers won’t. But there are pitfalls so think it through carefully.
Another option is drafting a clause that follows any state pooling orders. I have heard of this, but not seen such a clause.
**Getting the operators to accept, is another thing! 
We have to remember that we are developing a working “partnership” instead of a operator vs owner situation. **
Rick Howell, I do have a depth clause, but find it lacking due to your aforementioned HBP problems, so drafting a clause that follows state pooling orders would be a curative. I’ll try to find and post. Thank you once again and have a good day.
The key is if they will accept it. I’m more than willing to wait for a pooling in some areas!
In the Newfield report, it shows Legacy NFX in the SCOOP. Is this a joint venture between Legacy and Newfield?
Ronald von Wilson, In our area of OK it is highly possible that one county will produce more hydrocarbons than another. Here’s some articles that explain. http://www.searchanddiscovery.com/documents/2003/mcbee/index.htm
http://www.colorado.edu/GeolSci/Resources/WUSTectonics/AncestralRoc…
Victor Wetmore, Here’s is an article that might lend some insight on Legacy NFX. Newfield has joint ventures with HES & XOM, so a JTV with Legacy is highly possible.
http://seekingalpha.com/article/1521722-legacy-oil-gas-dramatic-dis…
“As the company (Legacy) moves to becoming a larger player in western Canadian oil production, it is continuously improving its drilling efficiencies. At the beginning of 2012, Legacy was drilling horizontal wells in 9 days, currently the company has decreased its average drill time to 6 days. Legacy has also been experimenting with water flooding techniques to prolong the life of older wells. Water flooding helps increase the recovery rate of the oil in a specific well.”
Martha, thanks for all the good links. If one is calculating potential royalties in Logan county, what price should we watch?
Also, the guv seems to put the brakes on news out of Egypt, when I am sure a lot more is going on. John Kerry is there now, so do not expect much more news as he has a clamp on nearly everything, more than Obama. However, I look for Egypt to more or less, probably more, collapse in the near, if not immediate, future, and I recall when Israel bombed the entrance to the canal, I was there shortly after, and saw many ship mast sticking up out of the water. If this was to happen again, and it very well may, then the market price of WTI will skyrocket in my opinion. Good for Oklahoma and great for Logan County, but might be a bumpy ride later.
January WTI and Brent Crude contacts, but Government tapering may greatly affect us this year and next. http://www.livetradingnews.com/analysts-expect-wti-and-brent-crude-…
Opal,
Devon started a well there earlier this year. I don’t see a completion report filed on it yet.
Here is a very interesting 3rd Quarter report from Neufield Exploration which leased my minerals in Kingfisher County this summer. It looks very promising…
http://api.ning.com/files/JYC2mJd5NlFTrG-tBIPwWha0QHZ9OAC-a5X53XSV4…
Wow, a well drilled in 6 days, it has not been too long ago that this would have been considered impossible. Then I also happened to note that over in Kingfisher County, all, or nearly all, producing wells were producing ove 1,000 BOD, Kingfisher of course is just to the west of Logan County. Stated 70% oil, and I may have overlooked key details because I did not have time to dig into this stuff any more today. So, they have 1,000 BOD in Kingfisher but hearing of only 80-100 BOD in the very next County? I suppose that is possible, but have my doubts. I will check more into it tomorrow. Also not there is a well in excess of 1,500 BOD in neighboring Alfalfa county back a year ago.
BTW I wonder how the boom in S Central kansas, Cowley County in particular that was being worked about a year ago? Is it still on or has it petered out?
Mississippian Lime water floods? Testing will answer that question and more. http://www.corelab.com/irs/studies/mississippi-lime
Oil prices are dropping like a rock…