Baker Hughes w/e 5-9-14 Weekly Rig Count shows 55 rigs running in Reeves County, up 22 or 66.7% year-over-year. Later – Buzz
My wife has unleased minerals in the SE/4 of sec 8, Blk 51, Twn 7 , located ca, 10 miles south of Pecos. This section is just under 4 miles east of section 256’ Blk 13 that Lynn Woods reported the high production of 45,960 barrels of oil and 81,993 MCF of gas from Jan to March. She recently received a purchase offer of $10,000 nma for the minerals. Now she has been contacted for a possible lease. Considering the production of the section 256 well, what would a fair, competitive lease be for these minerals which are located pretty much in the center of the floor of the Delaware Basin with good Avalon, Bonespring, and Wolfcamp potential in the 2012 Eagle oil & Gas article? Donny
Thanks everyone for the quick responses! Any ideas what the going rate is SE of Pecos?
I was also wondering about Apache’s new(ish) rigs… when I get a lease with them, will they owe me anything on the producing wells or did I just miss out because I wasn’t under a lease? Thank you kindly.
Marian, Depends on what your lease says, but you are likely stuck with the option price.
Bates, I would start at $4500, but really depends on the particulars. Tract size, access, nearby results, etc.
Thanks for the great information Wade. Location, Location, Location!
Thanks Wade. Interesting news. As we are coming up on whether BHP will go for the 2 year option on our lease at API 389-3340 Block 4 Section 64, my question is, can you negotiate the amount for a 2 year option when we signed a 3 year lease for only $1500 per acre? recommended lease per acre
CHK 256-13 well
on abstract A1884
Here is what I am seeing in Reeves, Culberson, and Ward Counties-
Extremely active in all three, with lease rates continuing to rise. Northwestern Reeves and East Central Culberson are especially active with lease rates going above $4000/acre. Also, along both sides of the Pecos, and around Orla very active. BHP did not pick up our option NW of Toyah, but a lot of interest in this area as well.
I would up my opening ask on any lease near the more active areas to $4500/acre. I suspect royalty rates may start going over 25% soon, but a higher royalty is much harder to get, as this is where the real money is, if they drill a well. Of course, there are big fluctuations in these numbers due to circumstances and location.
There were a lot of large leases made in 2010-2012 where operators staked out positions. Much of this is now coming off lease. Operators now have a better idea where the best areas are, and are taking smaller positions they can afford to drill without straining their capital budgets too much.
Good luck to all of you.
Marian, when we signed our lease with BHP we were told the downside on signing an option was one is stuck with the $$ rate at the time of signing. We are hoping if BHP doesn’t drill in the next 8 months they drop the option so maybe someone else will take our lease at today’s rate. ALSO we do not know if BHP divested our lease in Dec. Block 58 Sec 15-16 PSL Reeves
Marian – that option outcome would be interesting since BHP has several nearby producing wells and a gathering line crossing your SEC 64. Later – Buzz
Thanks all for you comments. Darn, looks like the lease does have some language that if BHP goes for the 2 year option (the original 3 yr lease is up in July) then they can renew with a bonus up to 2/3 of the original price i.e. $1,500 so I take that to mean we could only ask for another $500 per acre meaning we will be lucky to get $2,000 per acre in the 2 yr option?. It’s great to have all your support as we share how these dealings happen with each other. Thanks again.
Marian, I’m trying to follow your train of thought. Wouldn’t 2/3 of the original primary of $1,500/nma be $1,000 they would lease it for for the two year option? I’m not great at math, LOL!
I know that many of us are wondering about declines, so I found this comment positive. Not sure who the author is, as it was an observation of the EOG quarterly report. We are now just15 months since the first real test of the Reeves Wolfcamp. It gets better and better apparently.
I’m so glad I joined this forum, I’ve learned so much already. Thank you.
I contacted a O&G lawyer for help with my interests in SEC 3,4,5,8,9,10 of BLK C-5, but it turns out that they had a conflict of interest with Apache and can’t help me. Can anyone recommend a firm that can help me? I want to include Pugh clauses since I have a lot of sections but only 10 nma. As I understand it, Pugh clauses are tricky so I know I’ll need a professional.
At this time I’m waiting to hear back from Apache, but was thinking of starting negotiations at $4,000 an acre with 25%. Does that seem reasonable?
How can I tell how many barrels the wells on my property are producing? Will the RRC website help?
Again, thank you all for your time.
~Bates
Thank you both. I really appreciate the help.
John- is the oil lease/gas id number the same as API?
From EOG…
Recent advancements in completions and formation targeting have improved EOG’s productivity in the Delaware Basin Leonard Shale. With a two-rig program, EOG is actively developing the Leonard “A” zone, while testing other zones, and various spacing patterns between wells.
Further south in the Delaware Basin, EOG completed five Wolfcamp wells in Reeves County, Texas, in which it has 100% working interest. Although the Delaware Basin Wolfcamp wells typically begin production at lower initial oil rates relative to the Leonard, they maintain steady, flat production, delivering excellent after-tax rates of return. EOG continues to test spacing between wells to determine optimal development.
Thanks for the information Stephen.
For production figures on any well at the RRC you go here: http://www.rrc.state.tx.us/data/online/index.php
Select “Statewide production…” and then “Specific Lease Query”
You will need the District (08 in the case of Reeves Co) and the oil lease or gas ID number. Select the date range and then search.
No, API is the id number that follows a well through its life, though any changes in field, reservoir etc.
But, if you have the api# you can access all completions on a well: Easiest way is to use the RRC GIS mapping system. It is found in the same place I referenced earlier, just on the upper left of the screen here: http://www.rrc.state.tx.us/data/online/index.php
Enter the api and it will go to the location on the map. Select the well and the well data screens will open. You can access all the well records, production etc from those.
This is what I do for a living: Texas Oil and gas Regulatory Consultant. I’ve been researching historical records on Texas wells for more than 40 years.