Ovintiv - Section 29, Block 31, T1N

Hello Everyone, Is anyone familiar with Ovintiv? I’ve not had any dealings with them.

And, is this industry standard to ask for a two year extension without lease payment?

Lease Extension Proposal Section 29, Block 31, T1N, Howard County, Texas

Ovintiv recently drilled two horizontal wells through the West half of Sections 8, 17, and 20, Block 31, T1N which are scheduled to come online in early October. Ovintiv would like to see several months of flowback data on these wells before determining how to move forward with drilling wells through Sections 20 & 29, Block 31, T1N. Ovintiv currently plans to commence drilling horizontal wells through Sections 20 and 29 by March 21, 2023. Accordingly, Ovintiv wishes to amend the Oil and Gas Lease to extend the primary term as well as to clarify that the retained acreage for horizontal wells includes the acreage permitted under TRRC Rule 86.

Enclosed is an Amendment and Ratification which extends the primary term of the Oil and Gas Lease and clarifies the application of TRRC Rule 86 (“Amendment”). Ovintiv proposes the following in exchange for your execution of the Amendment: if Ovintiv has not commenced drilling at least two horizontal wells through Sections 20 and 29 by March 21, 2023 (“Drilling Obligation”), Ovintiv will pay you an extension bonus of $1,500.00 per net mineral acre (“Extension Bonus”); however, if the Drilling Obligation has been met, no Extension Bonus shall be due or payable.

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I believe this means that if your acreage was drilled before the end of your primary term, than there will not be a bonus. However if it was after term than a bonus will be applied. This may be a blanket letter sent to everyone that may have different effective dates. I would reach out to see if they can verify your particular interest/lease. Just my 2 cents.

They are offering you no benefit to sign this extension, so I would wait. They can pay you a bonus for a new lease when they decide they want to drill a new well.

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Perfect! Thank you for your response! I’ve never seen one set up like this.

Ovintiv is the new name for the Canadian firm that bought Newfield.

I would pass on the offer. I do not like two year options to extend. Too much can happen in three years and then another two years. I prefer taking the pricing at the end of the primary term. I would not personally amend the current lease unless I could get better terms.


Mary, Thank you so much! I really appreciate your insights.

Thank you for your insights! I told them that I wasn’t interested in this type of extension. And, now, they are asking me what it would take. Anyone have any insights into going lease rates in this area (Howard). We signed an extension lease in 2019 (2 years) and received $500.00 per NMA.

We received $10,000 per NMA as recently as late 2019. I know prices have dipped but remember you are effectively selling 75% of your minerals with right of reverter. $500 would be an insult.

Hello James, was this for a lease or a purchase? The offer I am posting on is in regards to a lease extension and the structure of the lease. Would love to know if your offer of 10K per NMA is for a lease.

If they are that aggressive then you may not have a strong lease. I would recommend you contact a lawyer (like Wade Caldwell or others on the Mineral Services tab) and have them review your lease form before going forward. A lot has changed since your last lease.

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Ovintiv is the new name for Encana.

The $10K NMA was on a fresh lease for 3 years. We received another lease offer recently and we couldn’t get them above $2,500 so we didn’t lease.

Of course they want an extension because of the COVID hiccup in prices and drilling schedules. They are just trying to hold on to there block. I wouldn’t get in a hurry if I was you.

Thank you so much! I truly appreciate your insights. I’m going to hold tight and have an O&G attorney review our current leases.

Why would you pay an attorney to review your current lease?

We had several leases with Newfield and they were really slow to pay when the wells started producing…Then the Encanta takeover. Not a word about the change. The next checks came much later from Ovintiv. Again not a word about the change. Communications with the Mineral Rights owners seems to be a problem!. The sunshine was the checks were cashed!!

To their credit, Ovintiv regularly pays on schedule within roughly a week after production data shows up on the RRC website. So no problems there. My compliant is their reluctance to resolve a title issue we thought obviated up front when we signed our lease. Our lease says they owe us for 30 acres, no matter what title issues come up. Oventive apparently claims we must wait until all other title issues are resolved. It may be that they figure the other lessees will get pissed off if we get out easy because of a specific contract item. But meanwhile, we lose significant revenues. Hey guys, a contract is a contract.

Trust me, the squeaky wheel gets the grease. Especially these days with Operators cutting jobs.

There is a rider you can add to your lease that requires the operator to put you in pay status within 90 days of first sales.