I received an offer from 1907 Land Company for my small acreage in Sec 6-3N-4W Garvin County. I know that there is a pooling application before the OCC from Marathon Oil. The offers range from $3K with 1/8th royalty to $1,200 with 1/4th royalty. Wonder what anybody else is being offered or what the pooling offers will be?
If they sent a letter saying that they will be pooling soon, then the prices may have been on it-they would be close. Section 5 pooled in Nov of 2018 for $1215 1/8th $1170 3/16ths, $1225 1/5th, and $0 1/4 for Woodford and $1012.50 1/8ths, $975 3/16ths, $937.50 1/5th, and $0 1/4th for Mississippian.Likely to be something close to those numbers.
I’ve been trying to decide where to put this info, but figure this is a good place, as it is in the same section. As this sits right on the Grady County line, its a little strange.
Have been receiving tons of Corp Comm filings, legal docs, various offers in this section for a year. The latest have been for: Muti-Unit Horzontal Well; Spacing; and Increased Density, all within the last few days. The applicant on all of these is Marathon, all are for emergency orders. There’s been lots of these emergency order requests, this is just the latest. The jist of it, as best I can tell is that Marathon wants to drill a multiunit well called Starfox 0304 2-7-6SXH in the Springer common source for Sec 6-7; plus a single unit called Mcloud 0304 16SH for Springer common source Sec 6.
It goes on to describe they will be (roughly) 240 feet from the North line and 1300 feet from the West line of Section 6. They also mention they want to use a rig and crew currently in Canadian County, and have them come drill this, and talks about spudding, skidding and other jargon. More interesting than most of these.
I don’t know what any of it means, or how imminent drilling really may be. I’ve been fence sitting for months on whether to negotiate on a standing offer to sell, or hang in there and see what happens on the ride. Very mentally tiring.
As to Meredith’s post, I never get any info about leases, and am not sure why. Just another aspect I don’t understand.
Marathon is going to drill 4 wells, the first having been spud. 3 Springer & 1 Woodford well.
If you are held by old production on the section (which you probably are), then you will not get any offers for new leases. The Starfox 0304 2-7-6SXH has spudded.
I’m trying to get more proficient with the OCCEweb site.
I have been able to find these spud reports for the Starfox and Mccloud wells to be drilled in Sec6 3N4W:
http://occpermit.com/WellBrowse/Webforms/WellInformation.aspx?ID=602923 http://occpermit.com/WellBrowse/Webforms/WellInformation.aspx?ID=602922
I’ve also studied up on exactly what a “spud” is. Very enlightening, and now I understand the old Spudder Steakhouse I loved in Tulsa better. With each having be spudded around 6-10-19, is it right to assume activity and/or drilling at maybe underway?
This would explain the renewed gusto of offers I’m getting for my few acres there. It is really causing me consternation trying to decide. My brother sold, and is happy and not looking back. Over the 50 years my mom owned these minerals it paid out some for about 5 years, then fizzled.
Are the horizontal wells a much different animal that the vertical wells, production wise?
Most of the horizontal wells are quite different from the old vertical wells. In a vertical well, you might have just a few feet to a hundred or so feet that was perforated. The horizontal wells can have 4000-12000’ feet perforated. depending upon how long the well is. The completion techniques are vastly different. The vertical wells were generally in conventional reservoirs such as sandstones or limestone with good porosity and permeability. The reservoirs were generally smaller due to their original geomorphic shapes. Reef plays are very large.
Horizontal reservoirs are usually silty shales which will fracture given enough pressure. The porosity and permeability are very low, but with the proper hydraulic fracturing, will be held open by little beads of sand that go in with the fracture water and hold the holes open. These reservoirs were the source beds for the shallow fields above them. The horizontal wells will have their highest production in the first four or so years of their lives, but are thought to have continuing potential for decades at low rates.
You have to think bigger picture than just one well. Horizontal wells only drain about three hundred feet around the wellborn. Think of a long cigar. They usually drill a section or two to hold by production and then come back later and drill more wells laid out like cigars in a box to fully drain the section(s).
So far, all of my offers to buy in the horizontal well plays have been quite a bit low compared to the potential of my acreage. They are usually about the value of one or two horizontal wells, but not the future potential wells. They hope you don’t know about the other potential value. Many of the sections surrounding you have either already drilled multiple wells or have them pending.
Chris:
Both Starfox wells (#1 & #2) are drilling as is the McCloud well. These 3 are for the Springer formation. The 4th well, the Campbell, has not been spud yet and will be a Woodford well.
So, (Martha, Todd) I’d assume these buyers are trying to assemble parcels to be held for several years, looking for sections that have yet to be exploited by horizontal wells? Guessing previous horizontal wells have been reliably successful, and they want to grab the next sections on the drawing board?
Are they figuring mineral owners are looking at their minerals with a vertical yardstick, as opposed to a horizontal one, if you know what I mean?
Just trying to visualize the whole thing.
Chris:
The parties making offers are totally aware of the horizontal wells being drilled and that have been drilled. There are very few vertical wells drilled anymore.
Just like everybody else that purchases anything, they hope to make some money over time, where as the seller might have a shorter time frame and prefer to take “the bird in the hand vs. 2 in the bush”. As a seller, you would be selling barrels of oil that are still in the ground. The buyer has to have well or wells that produce “X” amount of oil/gas to break even. After that “X”, they begin making money. The potential buyers think they can make money over time by finding a buyer that is willing to take their profit in the short term. I have been in the business for 35+ years and have bought some minerals that I wish I had never owned and have sold some minerals I wish that I hadn’t. Likewise, I have purchased some interests that have made way more than I paid for them. I am just an individual. Most of the buyers making offers today are working for or with private equity dollars and they person you are dealing with won’t have any “skin” in the game.
You just have to decide what you want to do- take some money off the table today or roll the dice and hope the wells work well enough to make you more than you could sell the minerals for today.
Hope this helps.
Todd M. Baker
Chris, you really need to look at both horizontal(length) and verticle(depth) because even sections with existing multiple wells may still have untapped zones above or below the current producing zone. This is why there are some areas that are still desirable for future exploration beyond what has already been tapped.
Michael, Well, for one of these wells the length is listed at 9913
Depth of deviation 12115 Measured total depth 22777 True total depth 13120
Sadly, that means nothing at all to me.
Martha, you said 300 foot around the well bore. So can you clarify this for me? Is it then 300 feet on either side of the well bore making it a total of 600 feet or less it 150 feet on either side of the well bore? I am thinking this would make a big difference as in the cigar box layout you spoke of. They would have to drill around 9 wells across to drain the section if it was 600 feet and around 17 wells if it was 300 total spacing. Am I anywhere near correct on this or completely nuts? Ha! The idea they will drill multiple wells across my sections sounds very exciting and potentially very profitable! On the prairie well where they go part way in section 33 4N4W and up through section 28, What spacing would they use here? I was trying to calculate what my check would be but I don’t really know exactly how to figure the spacing. It seems on paperwork I received that they were using 640 acre spacing but I don’t know how they would figure that since they are in two sections! Can you please clear this up for me? I appreciate your expertise and help. Thanks, Tom
Don’t think of it as a hard cylinder, but more like tree roots extending out “about” 300’ in radius (600’ diameter) along the borehole. They have to leave a 330’ easement on all sides of a section in order to not drain the section touching. So they can fit about 9-10 if they line them up side to side. Usually, they do not do that as the parent well (the first one) may or may not be interfered with by the child wells. Depends upon the area, but the company will try to line up the wells to get the optimal spacing between wells to drain effectively.
Most of the spacing in OK is 640 acres for each section of a multi-unit well, although some are 1280. The permit for the well may say what it is by reservoir. The spacing unit also has it.
You check is calculated by the following formula:
net acres/actual spacing acres x royalty x % perforations in your section. This gives the decimal amount. For every dollar in revenue received by the operator, you will get your decimal portion minus and required taxes or post production charges if you allowed them in your lease.
Not all sections will be an exact 640 acres. Sections along the top tier and west tier often have irregular lots to account for the curvature of the earth.
Arkomo, OK Gross production tax web site has posted volumes for Jan through April
Thanks Lynden, I would think I should hear from them by September on the Prairie Well.
I know the Prairie well starts in my section 33 and goes up into section 28. I know in my paperwork I was sent that my section 33 was to be apportioned 22 percent of the well. So if I am figuring this correctly I should figure the well to be based on 50 percent in each section. So I figured it at the total amount of the well and then deducted 28 percent to get my part. Hopefully I am correct on this. Thanks, Tom
Arkomo, You can just multiply the volumes by 22% then by estimated sales price. Divide that by 640 acres then multiply by your nma and then by your royalty rate.
The equation is: net acres/spacing acres (actual) x royalty rate x % perforations in your section.
The wells may be spaced at 640, but not all sections are 640 (especially if on the northern tier or the western tier). You have to then deduct the state taxes and any post production charges if you have them. Your royalty check will reflect them. They do not take out Federal unless you tell them to.
M Barnes, how in the world would one find out how many perforations Casillas and marathon has on their wells in section 33?
That information is provided to the OCC in the multi unit applications and is shown only as a percentage. If you participate in the well, you will be privy to that information.