I was wondering if any could tell me what is going on around Sections 2 and 11 of 6N-3W. I have gotten some offers to lease for the first time in about a decade. Thanks for any input.
Alvarado has filed for a three section horizontal just to the east of you in 1-6N-3W into 36, 25-7N-3W, (330 From the West Line) so common for leases to start in nearby sections that are open. White Sail has filed a few already.
The pooling amounts for case 2025-003249 for section 1 will give you a clue as to the amounts might be for sections 2 and 11. The case has not posted their order yet.
It is wise to get a good oil and gas attorney to review any lease draft. The draft is not usually in the mineral owner’s favor and needs revisions.
Name one thing in a lease that is in mineral owners favor
A carefully crafted lease by a good oil and gas attorney can enable a mineral owner to get royalties for decades by ensuring that their rights are protected under the state statutes and regulations and striking extra charges and unfavorable clauses that may be slipped into a draft lease.
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Who pays the attorney
The mineral owner invests in paying their own attorney to get the best information available at the time regarding the law for the best clauses to be drafted into the mineral lease in the mineral owner’s favor.
The operator pays their separate attorney to craft a lease in the operator’s favor. This is usually the first draft that is offered to mineral owners. (The difference in potential royalties is often surprisingly large).
The meeting in the middle to get a fair lease is often difficult. Some times a third party working interest owner will take a mineral owner’s lease because they want a piece of the well.
It’s all about skillful negotiation to get a mutually acceptable lease. Force pooling in OK is an alternate if an operator will not accept the mineral owner’s lease or something more fairly weighted.
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Why not invest in a geological opinion and make it yes or no
Most regular mineral owners cannot afford to invest in a geologist’s opinion. The operators have already had their geologists look at a particular area and they think it is worthwhile to drill if they are trying to lease. (Sometimes, they are right and sometimes they get surprised.) Better to spend limited funds by the mineral owner on an attorney’s opinion to get the best lease. Or wait for pooling and take the best option.
Speaking as a certified petroleum geologist who was on the company side for many decades. We did not lease if we did not think the play was economically successful.
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Right. It depends on perfs and all. It’s just an idea excuse not to lease. Access basically
I do not understand your last statement about perfs and an excuse not to lease. If the reservoir geology is not good, of course they will not waste money on leasing.
Sometimes u have to spend 2 million on a Frac to cover your costs. Like a cost plus. U can’t lose money got to at least break even
Can u think of any advantages to not owning minerals
Frac costs are included in the drilling and completion costs on the AFE (authorization for expenditure). The operators are fully aware of the costs.
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The costs plus 20%. Frac til u get your money back
Let’s stay on topic. If you are interested in that idea, please post in a different thread.
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Yesm. Thanks for your direction
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I also got a lease offer for 2 6N-3W. Offer seemed a bit low to me for horizontal at 3/16. Anybody else getting offers?
Various companies are leasing in 6N-3W, mostly Continental. The initial offer is often at 3/16ths, but I always ask for the 1/5th and 1/4 options as they will pay out better over the long run for successful wells. I see leases filed at 20%, 22% and a rare 25%. The lower bonus at the higher royalties does not bother me. The Woodford in this part of McClain is thin and competition drives the bonus prices.
It is wise to get a good oil and gas attorney to review any draft leases as they are not generally in the mineral owner’s favor and need quite a bit of revision. Especially important to get a no post production charges lease. If you cannot get one, then pooling is an option that has its own advantages.
I received an offer a couple weeks ago in Section 2 6N-3W. Bonus offer was about 38% of what I was offered in 2016.