Section 21

My brothers and I received an offer from Nextier Land Services, LLC (Tulsa, OK) for our interest in E/2 NE/4 of Section 21-7N-8E for 3/16th royalty and a bonus of $250 per mineral acre. We are wondering about offers others have received and, of course, wondering if this is a reasonable offer. Any feedback is much appreciated!

Jane Johansson

Lets talk Jane,

My minerals are S21-07N/10E........HORIZONTAL DRILL. (Hughes County). I do question the niggardly offer, given you, i..e., I was paid $1100.00 bucks per net mineral acre when I signed my lease in 2015. My minerals are in the WOODFORD FORMATION, and rich with natural gas. Find out if your minerals are part of the WOODFORD FORMATION? I "THINK" adjacent to the WOODFORD is the SYLVAN, and Mississipian (sp?) also rich with natural gas. ,,,,,,,,,,Leta

Ask for a 1/5th and ask for more. First offers are usually low to final offers. Make sure you have a good lease with no post production costs whatsoever, no "enhanced" value language.

M Barnes,

You are so good.. Jane, pay attention to M Barnes as M Barnes answered my many questions as I am a novice...........Leta C.

Thanks so much for the information, Leta. My brothers and I are novices, and admittedly we had never heard of the Woodford Formation or the Sylvan Formation. So much to learn!

My brothers and I sure appreciate your advice on this. We will definitely be asking for 1/5 and a larger bonus per mineral acre. I notice from Leta's comment below that you are quite informed. How does someone determine whether a particular piece of land is part of the Woodford Formation? Also, I'd like to become better informed all around in regard to oil and gas leases. Is there a particular book that you would recommend or a website?

Jane,

One other thing: When I got my tax statement in 2015 I noted that my minerals not only were from the 'Woodford Formation' but was called part of the 'ARKOMA BASIN.' I don't have a clue about ARKOMA BASIN, but info. might be helpful...........Leta

Oklahoma has several important hydrocarbon basins. Hughes county is in the Arkoma Basin (Arkansas/Oklahoma word blend) which is locate in the SE quadrant of the state. I have attached a picture. The Woodford is a particular reservoir within that basin.

The Woodford shale horizon extends across several states. I attached a stratigraphic column so you could see the order in which is was deposited. Oldest on the bottom.

313-ArkomaBasin.png (701 KB) 314-Scoopstack2strat.png (118 KB)

The Woodford extends across several states. Where is it productive depends upon its thickness and hydrocarbon maturation. So if you are getting lease offers in Hughes, you are in the Woodford. There are two excellent books that are on the NARO (National Association of Royalty Owners) website (www.naro-us.org) and on Amazon. For a lower price, Look Before You Lease is a good little handbook. Stafford is the author I think. The other one that is a much deeper and "expensive but worth it "read, but has good pictures is Money in the Ground. Also some good tips at the top of this page on the forum under Mineral Rights. Good article on Do's and Don'ts of leasing.

The visuals are quite interesting and the books will be helpful. You've been a wealth of information, and my brothers and I are most appreciative of your assistance. I'll order the books and start getting more educated!

Jane J.

21-7N-8E is 12 miles west of Leta's 21-7N-10E, and she probably leased to either Petroquest or Great Sky Partners, neither of whom have done much, if any, leasing in 21-7N-8E or adjacent sections recently (though Great Sky has leased some other sections in the township fairly recently).

Not too long ago I was offered $500/acre in ("next door") 6N-8E by a company that is currently leasing in this, and adjacent townships to the east and north (including yours), but their initial offer was quite a bit less and so I would agree with Leta that you should "question" the offer you received and hold out for something better if you don't absolutely need the money right now. If there were no competition at all for leases I probably wouldn't say that, but there is some here, and more to come I expect.

We don't want to (and shouldn't want to) price any companies out of our area by being greedy, but $250 is below market in my opinion. I've already discovered some are willing to offer more than $250/acre if they really want/need your lease, and competition has only recently (last 12 months) started heating up in the area. The more acreage you have (that they are in competition with others for) the better deal you can make. If you can't come to an agreement and they still want to drill a well they will likely apply to force-pool you into the unit, which is not always a bad thing if you can't agree on lease terms. Hope this helps you out. Frederick M. "Mick" Scott CMM, RPL.

Hi "Mick" Scott,

You are right on point, i.e. I did, in fact, sign my lease with 'Great Sky Partners.' And the OPERATOR was PetroQuest. PetroQuest is no longer the Operator of my well----the DORA (WELL NAME). TRINITY OPERATING out of Houston Tx. is now the driller. There was a disappointing period of time for me that my well was ..........."SHUT-IN".........WHY? Allegedly, the adjacent fracking was causing "SLICKWATER" to migrate to DORA which resulted in the so-called "Shut-In." Recently, so pleased that my well is producing once again, therefore I received a much welcomed Royalty check. It would please me even more if the Royalty checks continue. I love all the action of this OIL & GAS stuff! :-)..........Leta

Very interesting and helpful information! We will definitely work to get a better offer. If Nextier doesn't want to provide more, then hopefully some other company will be more willing. Thanks!

Jane

I also own land in section 21 and my siblings and I own 50% of the royalty (and the same in section 20).

We were offered $500 per acre as signing bonus W/3/16TH.

We had leased to them previously and were promised the same terms as before so we agreed to lease. However, after we received the contract, they had added another page titled "exhibit A" that totally changed what our cost would be. With the original contract, we didn't have to pay production, transportation etc. but the added page with the new contract changed that and the wording is really vague ( referred to our sharing in the cost for "enhancements" but give no indication as to what those "enhancements" might be ( would be whatever they wanted them to be). We had already filled out the forms, gone over the contract and had it signed and notarized but when the agent came with the check and insisted that we had to sign the added paper we refused to lease.....I felt as if they thought that due to my advanced age, I could be taken advantage of.

Also, NEVER sign and mail the contracts.....if you look at the top of the lease, it states "PAID UP IN FULL" but you have to wait up to 4 weeks to receive your check. I'm not comfortable signing something that says I've been paid if I haven't so. The leasing agent brings the check when he/she picks up the contract. You really to need to read the lease closely and be sure you understand it before signing (in the past, some royalty owners actually sold their royalty thinking they were only leasing it).

I'm looking into other oil cos. who have an interest in leasing royalty in the area and would lease with the our original terms ( no enhancement fees).

That's very interesting information, and I appreciate you sharing it. I'll be on the alert for those "enhancements" as well as added pages. Certainly, my brothers and I don't want to pay any production or transportation costs.