I inherited some working interests and need some help. I have been offered $1500.00 per acre to "assign" my working interest for a three year term with a two year year option. It also provides for a .8125NRI override (The actual NRI override is .875NRI) Garvin County Section 28-4N-4W. The landman sent me a paid up lease to sign. I'm confused. Can you lease a working interest? Any help or explanation would be much appreciated. Also, I'm also not sure whether that is a good offer.
What do you own, old oil and gas leasehold, or unleased minerals, that your ancestor participated with?
You wouldn't be leasing your interest so not sure why the landman sent you an oil and gas lease. You'd be making a term assignment of your leasehold.
This is a confusing area as it's part of the Purdy Hart Sand Unit. To further complicate things there's also some additional vertical producers in this section. The Woodford and Sycamore for example have already been pooled in your section and appear to be HBP'd by productive well(s). The impact being that your eventual election due for any additional wells in pooled formations will be do in 15 days per the order from Anadarko in your section.
That offer is commiserate with other offers I've seen in the area. They tend to be lower then neighboring townships since the Springer is partially depleted from drilling many decades ago.
Friend me if you'd like some additional information as I own leasehold very close to you. Cheers.
You may own an old lease that may be invalid or contains a depth limit. The offer for a working interest transaction followed by a lease to sign is probably an effort to clean up a questionable lease status and avoid including your land in a forced pooling action.
Look upon this as a "reset" of a lease that does away with the old lease and gives you a new one at 3/16 royalty for a bonus of $1500/acre. I'll wager that the terms of the new lease are much more restrictive to the lessor than the terms of the old lease. In other words, you have been offered a top lease that takes effect when you sign it.
I've managed a few "working interest" transactions in 2017 for mineral heirs and advise you to understand all you can about the drilling status of units that include your acreage and the geologic potential of the units permitted that may contain your acreage. Once you have that info, you can decide what is best for you going forward and negotiate accordingly.
In my experience, a term assignment could be an assignment of 13/16 of our existing leasehold interest and may be worth a great deal of money if you want to sell out your ownership. Take Huey Paxton's advise and find out what is going on in the immediate area then, if you have more than 10 nma, get some legal help from an oil and gas attorney if you can find one that helps lessors.
Gary L Hutchinson
Thanks so much Gary. Do you know anyone who might know what's going on in this area? I am a novice and this is way out of my comfort zone.
Thanks Huey....are you saying that my interest is getting ready to go to pooling?
It’s a working interest. The Landman sent me a Partial Term Assignment. I went ahead and signed for 1/4 royalty I have not received bonus check. They are working on title. What happens if I don’t get check? Can I cancel the lease by recording some kind of instrument? Thanks! Also another company a few days later offered me three times as much for same royalty! Guess I’m stuck with the first even though I have not received bonus?