We have recently been approached by an oil and gas company wishing to lease the mineral rights on our land. We are total novices on this, and would appreciate all the guidance and advice we can get. Thank you for your time.
Hi Laurie,
It didn't seem you were getting the help and guidance you were looking for, so I'll try. Are there any wells that you know of that are near you? It always helps to have a reference point on bonuses and royaltys. Once you've checked this out, leave me another message. It would be very helpful if you have a friend with a well. In the meantime, you might want to form a group under counties so anyone else with interests there can communicate with you about this. At present there is no group for Harvey County. Again, leave me a message with what you've found out.
To find your county directory, click on groups at the top of this message. Look for Kansas and start a group. If you need help, don't hesitate to ask. There are a lot of good people in this forum who, I'm sure would be willing to help.
Have a great day.
Yours,
Wes Luke
Hi Wes~
According to: http://www.kgs.ku.edu/PRS/County/ghj/harvey.html , we sit on a potential oil deposit (Walton). According to: http://maps.kgs.ku.edu/oilgas/ , our area is covered with old and abandoned gas wells. Our land is in sector 21, and in sector 15, which is diagonal from us, there is a marking of "intent". My guess is that with the new technology and known reserves underneath us, there is potential for development. If they have already recorded "intent" nearby, they probably need to secure the mineral rights within a radius in order to capitalize on the development in that one area (??).
CNN reported not too long ago that in counties south of us, lease rights are going for $1500/acre. We were offered $100/acre, which is high from historical offerings.
Thanks, Wes!
Laurie
Wes Luke said:
Hi Laurie,
It didn't seem you were getting the help and guidance you were looking for, so I'll try. Are there any wells that you know of that are near you? It always helps to have a reference point on bonuses and royaltys. Once you've checked this out, leave me another message. It would be very helpful if you have a friend with a well. In the meantime, you might want to form a group under counties so anyone else with interests there can communicate with you about this. At present there is no group for Harvey County. Again, leave me a message with what you've found out.
To find your county directory, click on groups at the top of this message. Look for Kansas and start a group. If you need help, don't hesitate to ask. There are a lot of good people in this forum who, I'm sure would be willing to help.
Have a great day.
Yours,
Wes Luke
Thank you, Tim, for your advice. They are offering far less than 20-25%. Since our area is spotted with abandoned wells, with the new technology there is renewed interest in our area. This company has been approaching a lot of folks in the county recently, so they may be the "first" to approach the area for development. The lease is for 5 years and is renewable. So, right away, it appears to be an enterprising company attempting to get ahead of the information to the land owners.
Timothy W Houston said:
I was a complete novice about one year ago, so I know how you feel. I have learned:
1. Never sign anything other than a 3 year lease, no extension.
2. All leases are negotiable and don't get fixated on the signing bonus. The interest rate they offer is more important. I don't know what is the norm in Kansas but in Tx the going rate for some areas is 20-25%
3. TAKE YOUR TIME AND DO YOUR HOMEWORK.......good luck
Laurie E. Tietjen said:
Thank you, Tim, for your advice. They are offering far less than 20-25%. Since our area is spotted with abandoned wells, with the new technology there is renewed interest in our area. This company has been approaching a lot of folks in the county recently, so they may be the "first" to approach the area for development. The lease is for 5 years and is renewable. So, right away, it appears to be an enterprising company attempting to get ahead of the information to the land owners.
Timothy W Houston said:I was a complete novice about one year ago, so I know how you feel. I have learned:
1. Never sign anything other than a 3 year lease, no extension.
2. All leases are negotiable and don't get fixated on the signing bonus. The interest rate they offer is more important. I don't know what is the norm in Kansas but in Tx the going rate for some areas is 20-25%
3. TAKE YOUR TIME AND DO YOUR HOMEWORK.......good luck
Hi Laurie,
In regards to royalties, whilst royalties can be around 25% in Texas (i.e. the Eagleford for example), in the Mississippi play (which is most likely what this company is targetting by leasing your area), royalties are generally around 20% in this play in the hot spots of Oklahoma, but obviously will be less in the relatively unexplored regions in Kansas like you are in.
In a Sandridge Energy Presentation, Sandridge states that they have an average of 85% NRI in their North West Kansas Leases, so in other words they are signing deals with ~15% royalties to land owners in North West Kansas. This is generally in a different area of Kansas to Harvey County, so it's hard to accurately compare, but could give a general ballpark figure.
Like Timothy said, royalties are generally definitely the more important factor, however that could vary depending on personal situations (i.e. royalties make you money IF/WHEN wells are producing, and some land-owners might look at the immediate leasing bonus as being more attractive, but if you're not desperate for immediate money then royalties are generally the most important).
Do you have any particular questions you want to ask any of us here?
Also are you aware if any of your neighbours have had similar offers? Talking to residents in the area could give you an idea of the current interest in the region.
And Is the company who contacted you a big company?