I recently received an offer to lease my mineral rights in Reeves County, below the Wolfcamp formation, and I am looking for help on what the going lease rates per NMA would be. Info on sections below.
Sect. 5, Blk C-1, PSL Survey. Limited to those depths 100 ft below the Wolfcamp formation.
Sect. 18, Blk C-1, PSL Survey. Limited to those depths 100 ft below the Wolfcamp formation.
Sect. 19, Blk C-1, PSL Survey. Limited to those depths 100 ft below the Wolfcamp formation.
Sect. 24, Blk C-1, PSL Survey. Limited to those depths 100 ft below the Wolfcamp formation.
Any help would be appreciated.
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I’m assuming the lease offer is from Optima, I received the same offer. Do you already have an existing lease for these sections? I don’t know much about having two leases but I do know we are currently under an active lease for the sections noted above. Is it ok to have two leases in this situation? Thank you.
Getting a 2nd lease depends on the terms of the first lease on the block. If that lease is depth restricted, one can get a lease on the section not covered by the 1st lease.
If there is production tied to the 1st lease and the block is HBP, if there is a Pugh Clause (depth severance), one can then lease that section tied to the depth severance and deeper.
But if you have an initial lease with no Pugh Clause or depth severance - and the block is HBP - then all rights (even those deeper than the producion) are HBP by that production.
I won’t comment on lease rates (aside from the fact that you should get a 25% royalty and a lawyer approved “cost free” lease.
An issue of concern in my opinion here is the depth of the “100 ft below the Wolfcamp Formation”
Below the Base? What is the reference point in a local well log as to “base of Wolfcamp). This needs to be clearly stated in any lease.
Based on what you are saying, I would guess that they are looking at Barnett and/or Woodford targets. And perhaps something in the Pennsylvanian section (above the Barnett - Strawn et al)