Sec 29- 15N - 13W NFXMC

Oklahoma Mineral Rights Blaine County, OK
#1

My wife and I are new to this and could use some input. We have some Mineral Rights in the above location and have this week received a letter giving use options for leasing our interests. The options are Bonus of $1600/ma at 1/8 royalty, $1500/ma at 3/16 royalty, or $1250 at a 1/5 royalty. The letter doesn't provide any more details as to other terms of the lease.

I have a few questions:

- Is this a normal way for the company to approach us to lease our interests?

- Why is there no detailed information as to the terms of the lease?

- If we wait and get force pooled are we likely to be in a better or worse position?

- Does anyone have any idea of how many $ per month / MA wells in this area are generating?

I hesitate to move forward with the letter without knowing more about the lease terms, or am I being overly cautious?

Thanks

Steve

#2

YOU SHOULD BE WARY! You need to know a lot more before you commit to the lease. I'm sure some of the oil experts will reply to your request on this forum and they will tell you a lot more about leases, wait for them to reply before you do anything that could be binding.

#3

Steve, I own mineral rights in 26-15N-13W. We leased for $12,000 an acre to Palaoma last February with 20% royalty. They are drilling 2 horizontal wells right now. They are supposed to finish up fracking next week. There is another well right across the road South that was a big well. They are a long way from offering you enough bonus and royalty. This area is really hot with some very good wells.

#4

Thanks, that is what I suspected.

#5

Cathy, thank you so much for you information. That is exactly the kind of relevant information that I was hoping for.

I will keep posting what I see come in as offers for more comments and to give others in the area some additional information.

#6

I didn’t want you to take less than your mineral rights are worth. I don’t know if you can get $12,000 an acre to lease, but you should be able to get a lot more than they are offering. Paloma also wanted to lease another place we have, and that helped us get the $12,000.

#7

Thanks Cathy, We are just going to sit and wait. Everything we are seeing and hearing makes me think that we can do much better and there is no rush.

I would think in the worst case we would be force pooled at better than they have offered at this point.

#8

As other owners have said, if you do get ready to lease be sure to read ALL the details (the Devil is in the details) and be sure that they are not going to be charging you for transportation, processing, and other items that can reduce your royalties drastically. Recently Alta Mesa was sued but settled out of course for $$$ millions for charging royalty owners for a lot of added expenses. Be careful. If you need someone to look over the leases hire a reputable landman (or oil attorney), the cost will be nothing compared to what you could lose by signing a bad lease. I'm been using Ryan Story, highly recommended and checking our interests in Kingfisher County and I'm sure he's knowledgeable about Blaine also.

#9

Thank you John. In our case I think we will likely get an attorney, as we don't feel we know the ins and outs of this business.

#10

FYI - I beleive that Ryan also has knowledge of competent attorneys. EXTREMELY important to find an attorney who is both knowledgeable and competent in mineral (oil) matters. We made a very big mistake allowing a relative who supposedly knew about oil to get an attorney when we went through a oil case and probate last year. The attorney was not competent in oil matters and it ended up costing us dearly in time and money, I would hate for anyone else to be in that position which is one reason we had to hire a landman to get things cleared up.

#11

We got a notice that they put in for a Pooling order.

So we will see if we get additional leasing offers as time goes by.

#12

Hey Steve:

I'm about 99% sure your minerals are HBP by the Sober #1-29 well and Reiniger #1-29 well, both operated by

Newfield, who took over operations from Chesapeake. If you contact Newfield, my best guess is they will tell you

that you are being pooled for curative reasons and your minerals are not available for lease. The well proposal letter

is nothing more than a formality. I own minerals in Section 29 as well.

Todd M. Baker

#13

Todd,

The Sober #1 well is on my wife's Grandfather land that she has inherited a share of.

I am not familiar with the term "pooled for curative reasons".. Is this something to do with breaking of the original lease of the Sober #1 well?

We have gotten a number of offers to purchase the Mineral rights but I think the offer from Newfield was the first offer to lease.

Do you have any other information as to what is going on here?

#14

Newfield going to drill a horizontal well targeting the Mississippi & Woodford Zones. The unit will be

Sections 29 & 32. "Pooled for curative" just means they want to name all parties, whether they can

lease or not, just so they have all their bases covered. You will probably get many lease offers, simply

mail outs from parties just doing mass mailings. They don't know what you own or whether you are

currently leased or not.

You won't have any luck breaking the original leases, unfortunately. So we are stuck with the old 1/8th royalty.

Todd M. Baker

#15

The producing well is marginal at best in the section. Averaging around 500 mcf a month this year. 300 mcf a month last year. I think there's a strong case to be made for a lease bust as at those volumes the well cannot be economic. I'm guessing that why he's getting offers to lease (likely top leases) as someone will likely go file suit against Newfield.

Ultimately he has nothing to lose if someone is willing to lease his minerals. Just needs to make sure he isn't on the hook if the bust is unsuccessful. You can typically get a 10/90 deal for top leases like this (10% down, 90% upon perfection of the lease).

Given that the hearing is Dec 8 for the pooling, I would act quickly if you have offers.

#16

We have gotten some legal help with the old lease.

Wait and see now.

#17

Sounds like a good start. I personally would not wait and see though. You need to file a protest at the pooling hearing on Dec 8. If your attorney doesn't know how to do that you need to find one that does. It's extremely important in my opinion as I've been down this exact road before and you lose a lot of leverage once the order goes through.

If you'd like additional advice/help message me privately. Would prefer to do it outside the public forum.

Best of luck.

#18

Thanks Huey, that is what I understand he is doing.

So we should see which way the wind is blowing on this.