Received Information that they are wanting to drill this well in Section 10 & 15
I am a newby at this so I need some input about options that they have offered :
1. Participate in drilling the purposed Dixon 1-10-15Xh well to the extent of your interest .
2 Lease or assign your interest to Continental for a cash bonus of $600.00 per acre with a 1/8 royalty / giving Continental an 87.5 Net revenue interest .
3. Lease or assign at $500.00 a care with 3/16 royalty giving continual 81.25 %
Well is wanting to "Test" the Woodford formation . Has that area been productive ?
Thanks in advance
Steve
What is the full location description?
The Well surface location is in the NE/4 NW4 of section 10 to a targeted bottom hole location in the SE/4 of section 15 , projected depth 16,350'TVD /22728
Steve,
There should be a township and range in that description. I’m guessing Oklahoma and maybe Carter Co.
Sorry , It is in Carter County, In the Note it stated that the Well is to test the Woodford formation ...
There should be more to the description. I’ve Continental making a move in 3W in Carter.
Is there something on there that says section 10 1N 3W or something like that?
Yes, Ok, Dixon 1-10-15Xh , Section 10-T3s-R3w and Section 15-T3s-R3w
Steve
That 3S-3W is the most important part of the description as it ties it to a base 6 mile x 6 mile block. The section number(s) then locates it within that block.
Continental has several applications in 3S-3W 4, 9, 10, 13, 15, 16, 18, 20, 21, 22, 26, 27, 35
To my knowledge these will be the first Woodford horizontals in the west edge of the county by a large company. There are several verticals and Merit has had some pretty good luck in in one about 18 miles South. Continental’s “SCOOP” map show it to be part of the thicker portion of the Woodford shale play. With all of the applications in this area at the same time, Continental must know something is there. Charter Oak has been drilling a few verticals in recent years two completions in 3S-3W show 160 and 350 BOPD. I have been expecting more to start happening in this area and therefore limited my leases in the area accordingly where production was expected to be above the Woodford play. I’ve been trying to follow it and this is the first proposed well name I have seen.
As far as lease amounts, there has not been enough poolings to really know. I think your offer is a bit light. I leased a year ago for a $1000 3/16 about 12 miles North. Bearcat first offers tend to be a bit low.
In light of some of the other drilling, I would try to limit the lease to the production zones being targeted or a GOOD depth clause releasing all “formations” not proven or producing at the end of the lease. Since they have already filled spacing applications on 10 and 15 (15 was approved already 10 is recommended) I would wait for a pooling order. I doubt you can get a lease better than the pooling order and the only risk is that they decide to not drill due to more info. Other companies have been targeting other formations in the area, so that is something to keep in mind.
Another option is trying for a 1/5 RI with about the same (or more) bonus, or 1/4 RI without a bonus. Your financial desires/needs, amount of acreage owed, and willingness to gamble would come into play here.
no less than 1/4 lease and above limitations on lease limitations. bonus @1000.00 acre. no game if you do not lease.
Are you saying you think he can get 1/4 RI and $1000?
c apple said:
no less than 1/4 lease and above limitations on lease limitations. bonus @1000.00 acre. no game if you do not lease.