Offer to lease Hughes County OK

Oklahoma Mineral Rights Hughes County, OK
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Checking to see if anyone has any insight on this letter I received. History of the Boy Scott 5 well, what it means for a company to “re-enter” a well? 10 acres seems like a tiny spacing unit, is that the standard size for a vertical well? Why am I hearing about a well drilled in 1993 that shows up under title as involving me, but I’m not leased, and it’s not active. Was it plugged and they are gonna turn it into a horizontal from that plugged hole? The re-entry cost doesn’t corroborate to cost for horizontal. Are leases getting 1/4 or 1/5 with better bonuses in this area?

Thanks in advance for helping, and to everyone participating in this wonderful forum!

R e : SW/4 NE/4 NW/4 Section 9-T5N-R8E Hughes County, Oklahoma

Dear Mineral Owner, My client, Neese Investments, LLC, proposes to re-enter the Boy Scott 5 located in the SW/4 NE/4 NW/4; Section 9-T5N-R8E, a ten acre drilling and spacing unit. The Boy Scott 5 was drilled in 1993 to a total approximate depth of 1087 feet. Our preliminary title check indicates you may own an interest which is currently not leased. In this regard, we ask you to consider one of the following alternatives relative to the project. Please make your election below and return to the address, e-mail address or fax above and we will mail an oil and gas lease for your signature.

( 1 ) Lease your interest to Neese for a cash bonus $75.00 per acre, royalty provision of 3/16* for a two year primary term. ( 2 ) Lease your interest to Neese for a cash bonus $100.00 per acre, royalty provision of 1/8* for a two year primary term. (3) _ 1 elect to participate in the project by paying my proportionate share of all costs attributable thereto.

The estimated cost for the re-entry of the above will be $150,095.00.

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The well is Boy Scout 5. The well produced from 1993 to 2008 at VERY low volumes of oil. They only picked up about once a year or every few years. These shallow wells may be spaced closed together because the drainage area is so small. The TD was 4287. The operator may be interested in going back in to try for a different reservoir. The first one was the Allen/DesMoines. which was at ~1067’ They are probably not going to use a hole like this one for a horizontal well as the well casing is small and the well is older. The price they gave for drilling is for a shallow well or maybe directional. Most of us would like the larger royalty. Given how shallow this is, 3/16ths is probably the best you will get. The only other two leases in the section recently were at 3/16ths. Neese Investments-the current operator of the well.

Investing in the drilling is not for the novice. One would need deep pockets for well expenses for possibly decades, good accountant, good attorney, drilling insurance, etc. .