Mineral owners and drilling contractors

Oil & Gas Field Operations
1

I’ve been trying to understand the drilling side of mineral exploration a bit better, especially what actually matters when a company is preparing to drill in an area where mineral rights have already been leased.

I understand that the operator and the drilling contractor aren’t necessarily the same thing, but I’m still a little unclear about how mineral owners can tell whether the contractor working on a project is experienced and properly equipped for the type of drilling involved.

I was looking into an Exploration drilling contractor Saudi project and came across Weco.sa while researching the subject. That led me down a rabbit hole of questions about contractor experience, equipment, safety records, previous projects, and how much of this information a mineral owner can realistically verify.

For those here who have dealt with exploration or drilling projects, what do you normally look at before trusting a contractor?

Is it mainly their previous wells and technical experience, the operator they’re working for, safety history, financial stability, or something else? Also, is there a good way for a mineral owner to verify who is actually responsible for the drilling before signing or extending a lease?

I realize practices can vary by country and type of mineral, so I’m mainly interested in how people here approach the due diligence side.

2

For most mineral owners who have very small acreage, they have no control over which operators will be drilling their wells. The operators select the intended acreage for an area based upon their internal geological and engineering expertise as to the most economic prospects. They send out the land agents to lease up the acreage ahead of when they plan to drill.

The US and part of Canada are the only countries that allow personal ownership of minerals. Everywhere else, the “crown” owns the minerals and deals with the operators.

Your question is a good one, but US small acreage mineral owners generally don’t have much say in the matter. In certain areas of some states with large mineral holdings such as in Texas and the western ranching states, they may have a bit more say by leasing with one operator over another until one gets a majority of the acreage in a drilling spacing unit. Some of those owners may wish to comment.

The operators do their own due diligence over which drilling contractors they will hire. Some have long time contracts with the drilling companies and some do shorter terms based upon the size and availability of rigs and crews.