Oil and Gas Lease Offer

I am a Landman in Texas and not familiar with lease terms in Oklahoma. I am trying to help a friend who owns minerals in McClain County, Ok is Section 27-6N-4W. They own 5 net mineral acres. They have an offer to lease at $1200 a net mineral acre ($6,000) bonus, 3 yrs and 3/16ths royalty. Does this area warrant a 1/4 royalty?

Thanks,

Chris Zander

Chris,

I think it depends on the client and their tolerance for a gamble. I think a 1/4 will pay off, but the question is when. 2 years or 5? There are also some other formations that may see some action in the future. Personally, if I took 3/16, I would want to do it as a pooling election and leave the other formations open. The recent completion history in that area are Verticals.

Newfield received a recommendation on the pooling hearing last week. I'd say the order will be out in the next 2-3 weeks. It might be prime for a 3rd party to lease it. They might be able to pick up $1000 and 1/5 or 300-500 and 1/4 through a 3rd party on it.

Send me a friend request if you need a contact that might be interested in the acreage.

Thanks Rick I appreciate the information. I will send you a friend request.