We just got this from Dry Creek Energy, just wanted to know what you all thought to the price being offered for leasing?
This is Caton Hogan, with Dry Creek Energy LLC. Thank you for speaking with me this morning about the mineral interests that you and your family members have in Roger Mills County, Oklahoma.
Our records are indicating that your oil and gas lease in 8-12N-24W has expired, and I’m offering a new lease with a primary term of 3 years, and I can offer $350.00 per acre for the bonus consideration. We can also include an option to extend the lease for 2 additional years, and if the option is exercised, we would pay $437.50 per acre (125% of the primary term bonus).
Personally, since there have been no new leases in that area in at least 999 days, I always sit on offers like these. Early ones are usually lowball. I never take an option to extend because who knows what will happen in three years.
LE Norman Operating has a new horizontal well possibly in section 14 with a surface location in section 23. I would wait and see how that well turns out.
For right now, you could ask for a copy of the draft lease form to review. It will most likely need quite a few revisions. The offer for the extra two years indicates this is slightly speculative by giving that five year time frame. In the big scheme of things, the lease bonus is usually quite small compared to the royalties. I also ask for the rates at 1/5th and 1/4th. I always ask “who are you leasing for?”, “who will be the operator?” “what zone will they be drilling?” “when do they expect to pool and then drill?”. If they cannot answer those questions, probably a flipper. No harm in that, but I like to know who I am dealing with.
Thank you so much! That is helpful information!
Roger Mills County OK 8-12N-24W: Updated offer from Dry Creek
A. What happens if a well is drilled and you don’t have a lease? (I think this is called forced pooling.)
B. When it gets closer to drilling a well do they offer us more money to lease?
Dry Creek is telling us they plan to drill next year in Section 8 if Oil prices stay up, they increased their offer from $200 to $350 and 3/16, they would not tell us who the operator is only that they are not flippers.
Thanks for any input!
if you do not have a lease, then force pooling is supposed to happen before they start drilling. In rare cases, they do them out of order.
Leasing prices tend to be linked to oil and gas prices and perceived value of the new well. In some case, the prices go up for the bonus and some cases they go down.
Current regulatory activity in that township is center around sections 14 & 15 by LE Norman Operating and Templar Energy. There is a horizontal well in section 7 in the Granite Wash, so that is good.
There are no other leases filed in the whole township at this time within the last 999 days. As I said before, I ask them what they are going to offer for 1/5 and 1/4 just to see what they say. I ask them when they plan to file the OCC cases. Ask if they are going to drill a vertical well or a horizontal well. Personally, I don’t jump on a lease offer when there are no others filed. I do ask to see a copy of their lease draft as it almost always needs changes. The lease terms are so much more important than the actual bonus.
Thank you, we appreciate your input!