Re-compete a lease in 09-05N-05E?

My cousins and I have been advised of a re-compete for an existing lease in Pottawatomie County, 09-05N-05E (company has incorrectly classified it as Seminole County).

Two questions:

  1. Is this a common practice, and if so, what specifically should we be watching for or aware of when considering this?
  2. What is the “going rate” in the area? They have proposed 3 terms, $75 and 3/16ths, $100 and 1/8th, or participating in the cost (which we know not to do).

This is an oil producing well (drilled in 1941) for which we haven’t received royalties in quite a while (and I think we may be due some, but haven’t been able to investigate that fully yet).

Any comments and/or thoughts would be appreciated.

It is quite common for old vertical wells to be recompleted in a new reservoir. Typically, wells will be completed in the deepest zone first and then work uphold, but not always. If they are going deeper, then you may be asked to lease again. If you can give me the name of the well, I can look it up and see what may be happening.

It’s always been listed as “Walker” in our leases (PUN 125-009868-0 with no API number in the OTC portal), but I believe it’s specifically the Walker 2, when I looked in the OG Well Records, as I know Randy & Jan Walker were the operators on the well. The description has been SW/4 SE/4 and the letter indicates that the well had been drilled to a depth of about 2535 feet, but I couldn’t match that in the OG records - if I was looking in the correct place.

Our ownership is:

  1. 5/94ths MI in 09-05N-05E - Lot 4 in SE/4 of the SE/4
  2. 2 1/2 acre MI in 09-05N-05E - Lot 3 and the SW/4 of the SE/4
  3. 250/6758 MI in 09-05N-05E - SW/4 of the SE/4 and Lot 3 in the NE/4 of the SE/4

All in the SE quarter.

As an aside, how do we determine if we haven’t been paid royalties for production? We’re all relatively new to this as all our parents passed within the past 3 years, left us with an incomplete record trail, and we’ve been trying to get a handle on the information through researching old mineral deeds at courthouses, O&G leases, probate records, online records, etc. I have engaged a land man to help us with questions about what we simply don’t understand or can’t interpret. It’s been an education. The more we learn, the more we realize that we don’t know…

Thank you!

Walker 2 (35-125-05492) was originally completed in 1941 by Carr & McCracken. It was sold to Walker (Randy & Jan) Oil Company LLC in 2005. It was reclassified as a disposal well. It was recompleted in 2016 by the Walkers and notes are on the 1002A form. There would have been no royalties while it was a disposal well. All the records are filed in the OCC well records site. Test

Some are missing according to the last Form 1002A which I posted for you. Current depth is 2630’.

You would have to contact the Walkers to see if there are any new royalties since 2016. You would have to make sure that your parents’ probate documents are filed in the Pottowatomie County courthouse before they would be able to release any to you. They would need to send you a new division order. I checked the Gross Production site and do not see any royalties in the last 12 months. Another subscription service says there was very low production from about 2008-Dec 2018, so contact the Walkers. Thier address is on the 1073 form on the well records site. At total production of 28,436 bbl over decades and decades, it was a poor well and not much royalties to hunt for.

As far as a lease, personally, I usually take the highest royalty offered if I am reasonably sure of production. If it is a wildcat or a poor area, then I may take the 1/8th since the bonus will be all I will get as the well may be dry or have low production. The clauses of the lease are more important than the bonus amount. The original draft of the lease will not be the one you want. It will be all in the lessee’s favor and not yours. You do not want to participate in the well if you are beginners.

Ask what they are planning to do with the new completion-what zone or if they are recompleting in the Hunton Lime. Technically, your old lease is dead due to non-production for over a year. This will be a new lease.

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Thank you for your assistance! It’s greatly appreciated!