I have my leases coming due in April of 2012 in Williams county. One section has had a permit to drill for quite awhile with no action, another section has no permits as of yet. Do i see a top lease potential? Zenergy, Petro and Contential are puching wells like mad. It is in the 157-100 and 99 area. Anyone else getting top lease offers?
Regards,
Kevin
I think top leases are usually for less money than if you let the lease expire and negotiate from a stronger position. Nothing says you can't negotiate a new lease with your lessee that supercedes your current lease, if your lessee wants to be certain of keeping your acres in the fold, and you want to rectify some deficiency in your bonus, royalty or charges for transport of oil or compressing / conditioning gas. I don't know how many net acres you have, but how much would you make off 10% of the bonus from top leasing if you are drilled under the original lease? I would rather have the better bargaining position after my lease expires. Good luck with your descision.
Kevin,
My company is currently pursuing top leases in the 157-99, 100 areas. However, the fact that there are some active drilling permits does worry me. What sections do you own minerals in? I can check the production status and let you know if your lands are currently HBP, which would mean that your lease would extend beyond the expiration date in April. Also do you know if there is a pugh clause on your lease?
Hopefully I can be more helpful with a little more information.
Thanks,
Alexander Newell
Case in point Kevin. I think drilling permits are meaningless. They only cost $100, that's about 8 cents an acre for a 1280. Just because there is a permit, it doesn't mean you are about to be drilled, but it seems that is a good enough reason to view with alarm and start working the price lower. If an 8 cent per acre permit may bother someone, I'd say let your lease expire and get multiple offers so they don't have to worry about the permit.
Alexander
I have interest in 157-99-7/18/19 and also 157-100-24. I do have a pugh clause. I know section 7 is HBP.
RW
What do you mean by workin the price lower?
Thank you,
Kevin
Kevin, so many permits have to be renewed over and over because they were never drilled that the fact that a spacing has a permit has practically no relation to whether it will be drilled or not in the next year. No offence meant to Mr. Newell, but he did immediately say that the active permits worried him. Why do you think he would mention it? I would be much more concerned with when the majority of the leases expired. I think that would be a better indicator of approximately when the operator might rush to start drilling operations. Case in point, I am in a spacing with great production just over the line in the next spacing, there has been a drilling permit for years, permits have been approved, permanently cancelled, more permits obtained, multiple permits obtained, operators have changed and the permits have changed again, for a few years now, with a great well just over the line in the next spacing. When do I expect them to drill? I don't. Operators need a permit to drill, a permit to drill existing has nothing to do with whether they are going to drill in the next year or not. Kevin, your spacing has probably been permitted for years also. Permits are cheap as I pointed out. Why would a professional even mention worry over a permit? I think it may be that negotiations have begun and you hadn't realized it yet.