Got a email from Cimarex who we have a lease we own the land and minirals. This is what it says Cimarex would like to do. Drill a well on the above described land, said well will be a directional/horizontal welbore and will travel to the sec.north of 33-11N-8W which is sec.28-11N-8W, they will benefit from the production. Cimarex needs an area400’x400’ which will be around 3.5 acres in size for placement of drilling rig. Cimarex will pay $25,000 in surface damage and any additional crop damage should a crop be present. Next email says this location is called an out of unit location due to the fact the production will be coming out of the north . They will reduce the the size of the location after it has completed its drilling operations from this location. Should they decide to drill a second well from this location they will pay an additional $10,000 and should not require any more area the original 400’x400’ should be sufficient for both wells. Dose anyone if this is a good deal or what should we do.
Laura,
Absent knowledge of any constraints you may have on leasing the surface of your land permanently, you have a chance to encourage development of the area. However, my experience tells me that the disturbed area for drilling and completion will be closer to 10 acres then be reduced to the 3.5 acres on a permanent basis. Check the land values for small parcels in the area assuming that the final drill platform will be there for at least 30 years. Do some research on the loss of your land for a couple of generations or more and deal accordingly. It may be in both parties interest to use an agreement that gets you an adequate disturbance fee and and ongoing annual payment for the life of the well pad use.
Whatever you decide, get some legal help from a local real estate lawyer to protect your future. The legal fee will be covered by any deal you do with the drilling company.
Thank you very much Mr. Hutchinson for taking the time and giving me very good advice. We will do that.