I got a surprise lease offer for my minerals in 19-18s-27e. Looks like Burnett Oil Co wants to drill 9 wells. This came as a surprise since I didn’t have any offers to buy out my minerals prior to permitting.
Has anyone heard anything? I checked some of the surrounding wells and the production doesn’t seem good at all. Perhaps Burnett has some cool new tech that will make it worthwhile?
Speaking of Burnett, I’ve never dealt with them. Are they reputable? I’m halfway considering participating (I’d have a .000XXX interest if I did).
Be aware that participating has it advantages and disadvantages. Participating is not recommended for the novice unless you have deep pockets, can hire an oil and gas attorney and an accountant, get liabilitiy insurance, put the the assets into an LLC to protect you from personal liability, be willing to pay decades of operating costs and pass that on to your heirs. Just a few items to consider. Talk to your CPA and attorney before deciding so that you understand the pros and cons.
Burnett already has multiple horizontal wells permitted from a location in 19 going west into section 24-18S-26E. And another set from section 24 going east into 19-18S-27E. Horizontals tend to have much higher production than vertical wells.
Hi- usually when we receive a participation/working interest lease request we will pass for all the reasons M. Barnes mentions, but we always request the operator/driller provide us with royalty lease terms and then negotiate a RI agreement. They can’t exclude you because you pass up participating in the well but if your minerals remain unleased it will be a long time before you see royalties due to NM’s rules.
Is it a lease offer, or an offer/election to participate? It seems to me that if it is an oil & gas lease offer, they may be running that concurrently with seeking permitting, but will need to do the spacing/pooling separately once they know who they can lease and who wants to participate.
Ryan – It’s both. I can either sign a lease at 1/5 or I can elect to participate.
Is anyone familiar with the area? I’m looking at surrounding production and it doesn’t seem to be what I’m used to seeing in Eddy county. The legal is section 19, 18s 27e
Seems kind of odd to be drilling so many wells in that area where historically it hasn’t been a strong area (from what I can see).
I would guess the wells will be fine. They will be Yeso wells. Hz but shallow.
You are not in the Delaware Basin, you are on the NW shelf. So it’s not going to look like a lot of Eddy County, but it should look like the Margaret, Leavitt, Kaiser, etc wells just north of there.
Unless you really just want to be in the working interest business I would lease.
I did look at those wells. I noticed the water production is crazy high. I am not a pro, but I think that may be a problem. Do you think it would be expensive to build the infrastructure to dispose of the excess water here?
In general in that area there are a large number of deep vertical wells that have been or could be converted to injection. In the Cisco etc. Deeper than any of this production. Riley Exp for instance has 4 SWD wells in 18s27e that have been taking like 15kbpwd. Its not THAT expensive to just run lay flat and pump water over to an SWD.
But yeah, I would guess making 6-7 WOR here hurts your econs somewhat. And I’m sure they need a non trucking SWD option. Or else things won’t work out. Hopefully nobody causing any injection earthquakes in Artesia and scaring my parents.
