We own 1/2 minerals and all the surface on a 70 ac. tract. A large oil company drilled a horizontal well nearby and looks like they may want to drill another string in our direction. We tried to negotiate a lease on two separate occasions but we couldn't agree on terms. Now a seismic company has contacted us wanting to run their seismic tests across our property. We told them we wouldn't give a seismic permit without a lease on our minerals. Seismic company came back and told us the other half of the minerals were leased by the oil company. Any advice? Why would we let an oil company test our minerals without a lease? Is there something I'm missing? BTW, the nearby well is producing very little oil and no gas.
C.R.
Walker County, TX
Dear Mr. Robinson,
I hate to be frank sometimes. The oil company does not need your permission to shoot your acreage, if the lease on the other mineral interest does not prohibit seismic. We are only talking about Texas, now.
The oil company have full rights to step foot on your property and set off seismic charges and lay out geophones. They are limited to not interefere unreasonably with your current use and have no rights to use your improvements - like a ranch road,
3-D shoots cost about $80,000.00 per square mile to acquire the data. Then there is processing costs on top of that.
My point being is that they have a crummy well and are willing to invest large dollars to survey the area. Shale geology is funky in its general nature. All will produce, but they are looking for sweet spots -- fractures and micro-fractures that can aid in the flow. The crummy well might have had a bad completion.
So, here are your options.
Do nothing. If the oil company chooses to, they will force their way on and slap you with a restraining order and potentially sue you for damages. Stand by time for a seismic crew will run over $7K per hour.
Do nothing. The oil company could choose to stack charges all around your property and get the data anyway. The quality is not necessarily as good. 80 acres is about the maximum size to get good undershooting.
Sign a lease. That is if you are offered one.
Sign a permit.
Sign a lease option (my least favorite given the other 1/2 is leased)
To answer the question "Why would we let an oil company test our minerals without a lease? Is there something I'm missing? " What you are missing is that if they really want to shoot your lands they can do so, assuming the lease provides as mentioned above. What you are also missing is that they have the right to drill a horizontal wellbore through your minerals (because you do not own them all) and set take points 330' off the property lines on the entrance and exit to the property. Then you are checkmated. You are being drained and can do nothing at all about it (hardly).
Seismic/oil companies do (at least the smart ones) want to accommodate people and not flex their muscles. And nobody seems to like seismic agents or right of way agents anyway.
Best
Buddy Cotten
Hi, Charles -
You won't get a better response than that you received above from Buddy Cotten.
If you need help locating a company willing to accept the terms you proposed in your lease that the other company did not accept, I may be able to help you find one.
If you would like to discuss the issue more privately, accept my offer of friendship on The Forum and we can talk about it there.
Hope this helps -
Charles
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
One thing that I did not expand on further.
It is much better to execute a well prepared permit rather than none at all.
The well prepared permit will address a lot of surface uses that a "no permit" relies on case law -- which for the most part is mineral owner friendly, because of the dominant estate status of the mineral estate.
Best
Buddy Cotten