Has anyone else received an offer for this section? Our offer is from continental Resources at options following:
1. $750 acre, 3 year lease, 3/16 royalty with 2 yr option.
2. $850 acre, 3 yr, 1/6 royalty, 2 yr option.
3. $1,000 per acre, 3 yr, 1/8 , 2 yr option.
Is there drilling or production activity at present?
We are new to the leasing side so Is this poor, average or good?
Are these negotiatable?
Will there be offers from other companies? And if so, how to decide.
Newbie,
Paul
I'm not 100% up on all of the offers but I have not seen a 1/6 offered in this area. That is about in line with some of the pooling orders from Continental in Grady, although some closer to 3N-5W are getting 50-100% more. Calvin energy has been doing most of the leasing in 4N-7W that I have seen and the offers were quite a bit lower.
On the leases I have negotiated, I have not been willing to accept an extension. I also don't get in an hurry about leasing upon first contact. I've waited 3-12 months and it has paid off very well to us.
The clauses you are able to negotiated may pay off much better in the long run than the bonus. A great lease with a lower bonus can be much more valuable in the long run.
Just last night I was researching why we are not in a pooling order. It is very possible we are held by production on a lease that is over 50 years old. If that is the case, we are going to be stuck with an 1/8 RI instead of the 1/4 that I would be negotiating. 1/2 the revenue!
Most of the Continental poolings offer 1/5 and 1/4 RI options. Depending on your acreage and need for the cash, I would be leaning that way. I wouldn't tie it up for 1/4 and $0 on a lease just yet however.
Rick, thanks for responding. Boy, I have a lot to learn, so if you have time stay with me on these questions.
On Calvin... Can they also offer us for the 23-4N-07W? And if so, if Continental signs some AND Calvin signs the rest of the interest owners, do they have a dual at 50 paces to see who gets the rights to drill?
So, waiting 3-12 months is no big deal?
On your comment as to why we are not in a pooling order ... ; who is "we"? Would u be in the same pool as I am?
As to you would lean towards 1/5 or 1/4 options; Ok understand but don't understand not tie'ing it up for 1/4 with $0 lease just yet. Really? 0 lease bonus? Is this based upon it is very likely that the higher royalty would make up for the 0 bonus?
I would appreciate it.
Paul
Sure Calvin can make offers also. It is not uncommon for two companies to lease in the same area. Usually the one with the most acreage will be the end operator and the other will either trade, sell, lease it to the other, or decide not to lease and participate. In some cases it becomes a fight and the OCC will have to rule.
I don't think waiting is a big deal and it has been profitable, leasing 3-5 times the original offers. At a risk that interest will drop in the area and no one will want to lease. From what I have seen the first people to lease, gain the least.
We= my family. I manage our families interests. We don't have property in your section. The closest we have would be about 5 miles S of you. The pool would depend on the wells assigned spacing. Most of Continental's will be a 640 acre Section. So anyone that owns rights in 23-4N-7W will be included. The pooling it to force the ones that will not lease (or can't be located) into "leasing". You "should" get the best price in the pooling order. I've been told that only about 1/3 of the leases ever get drilled. Sadly our percentages are lower than that.
It is very rare to see a bonus paid for a 1/4 RI lease in Oklahoma. You would be getting 50% more monthly income from a 1/4 than a 3/16, so yes it should pay you back..... if the drill! If they don't you get nothing. It is a gamble. But in your case, if you have 1 acre, how much does $750 change your life right now. Compared to an extra $400 or so a year if drilled. It is a harder decision if you own 200 net mineral acres. If that is the case you really need to engage a professional.
Rick,
If you recall I have a well originally drilled by Anadarko and I have a "Drilling and Spacing Units" form issued by Anadarko that states the spacing is 160 acres. This well was drilled in 1994 and is still producing. It is held by production by Sheridan Production but the Woodford has been sold to Continental by Sheridan. The question is does the spacing get changed again by Continental should they drill, from 160 acre spacing to 640? (This is in reference to Grady County, 105N5W. Also, is there any activity in this area that you know of?
Thanks
Gracie
Rick Howell said:
Sure Calvin can make offers also. It is not uncommon for two companies to lease in the same area. Usually the one with the most acreage will be the end operator and the other will either trade, sell, lease it to the other, or decide not to lease and participate. In some cases it becomes a fight and the OCC will have to rule.
I don't think waiting is a big deal and it has been profitable, leasing 3-5 times the original offers. At a risk that interest will drop in the area and no one will want to lease. From what I have seen the first people to lease, gain the least.
We= my family. I manage our families interests. We don't have property in your section. The closest we have would be about 5 miles S of you. The pool would depend on the wells assigned spacing. Most of Continental's will be a 640 acre Section. So anyone that owns rights in 23-4N-7W will be included. The pooling it to force the ones that will not lease (or can't be located) into "leasing". You "should" get the best price in the pooling order. I've been told that only about 1/3 of the leases ever get drilled. Sadly our percentages are lower than that.It is very rare to see a bonus paid for a 1/4 RI lease in Oklahoma. You would be getting 50% more monthly income from a 1/4 than a 3/16, so yes it should pay you back..... if the drill! If they don't you get nothing. It is a gamble. But in your case, if you have 1 acre, how much does $750 change your life right now. Compared to an extra $400 or so a year if drilled. It is a harder decision if you own 200 net mineral acres. If that is the case you really need to engage a professional.