Section 9, Township 13N, 5W

#1

Is there any drilling going on in this area? My lease expires next year and im curious about what’s happening here. Thanks

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#2

Lots going on around you in 8 & 17, 10 & 15, 6 & 7. Keep your ears open. You will get any pending cases from the OCC if they have your correct address at the county.

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#3

I believe my acres are near the subdivision in the SW corner, is it the case that horizontally it can be accessed from other sections?

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#4

Yes, it can be accessed from other sections. Usually for a long horizontal, 4 & 9 often go together. Nothing on those two yet for any new drilling. Keep an eye on Roan Resources, Native Exploration and Marathon Oil.

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#5

If a lease offer has an option to “pay your share of well cost”, is that to encourage you to sign the offer before being forced to act later?

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#6

There is also offers to accept or decline insurance coverage

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#7

Those questions are asking you to become a working interest owner which is not for the regular mineral owner unless you extremely deep pockets, the willingness to lose it all, heirs that will take over when you pass, deep knowledge of the oil and gas business, a good attorney and a good tax accountant.

If that is a letter that you received that has various options listed on it, I never sign them. We never participate as a working interest owner. It is a hint that a pooling order may be coming and anything you say on that letter will just have to be done over again on a lease or a pooling selection. Waste of time to deal with it in my opinion. On the other hand, it is a clue to try to get leased at those terms or better, or wait for pooling.

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#8

Thanks so much for the information!

What if one of the options is a favorable lease rather than as an interest partner? It says if I choose a bonus lease option, they will send a lease agreement to execute. It’s from Clarity on behalf of Red Bluff. Isn’t a lease preferable over a pooling?

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#9

You can go ahead and request a lease to review. I just suggest not signing that letter (although it probably has no legal standing-kind of like a straw poll.) as it is a waste of time in my opinion. There are benefits to leasing and benefits to pooling. If you can get a good lease with the clauses that protect you, then a lease is fine. If you can’t get a good lease, then pooling has advantages. It is essentially a very short term lease of six months to one year for only certain zones.

There are quite a few folks leasing in that area. That is why I don’t sign a letter of intent as you may get an offer from someone else.
It will be very important to get a good lease on your acreage. (The first lease they put in front of you is probably not in your favor and will need some negotiation to improve the terms. ) There are likely to be multiple horizontal wells drilled there, so if it were me, I would pick the highest royalty and not really care about the bonus. You would need to choose the best option for your family. The bonus is only given once, but the royalty will apply to every well drilled under its terms. Make sure you have no post production charges, no “enhanced” clause, no charges at all.

Read over your old lease and see what terms you need to change for a new one. No post production charges, no warranty of title, no two year option, no top lease clause, etc. are ones that I check for. I also add a depth clause, limit the shut in time, add a commencement of drilling clause. (not giving legal advice…)

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