Usual leasing practice

I own mineral interests in Winkler county Texas section 13 and 14 in block A-56 PSL. I just learned that Continental Resources has applied for and has a permit to drill a well (API) 495 34927, named JACKRABBIT1308A, on my section 13. I have mineral interests in other states, but these are my only interests in TX; consequently, I am not familiar with “normal” practices.
First, my property is NOT leased. Is it normal practice to obtain a drilling permit before having the land leased? I have leased the property in the past, but it is not leased today. Should I expect a pooling order before the well is actually drilled and how fair are the pooling orders to the mineral interest owner in TX? NM is terrible but OK has been Ok (a pun?). I have received a recent offer to purchase my minerals but to date there has been no lease conversation. I have no interest in selling. I have a call in to Continental but have not made connection as of this time. What should my next step be? Regards to all – Archie Smith

• Is Section 13 Block A-56 a divided or an undivided section ? If it is a divided section, your minerals may only be adjacent to–not within–the Jackrabbit unit. • How many net mineral acres do you own in Section 13? • Do you know other mineral owners in the section? It is my understanding that Texas rarely force pools, but you might have to contend with being an unleased mineral owner if you are in an undivided section and if you can not come to terms on a lease and the well is drilled and produces. (At the top of the page on this forum, search “TAMU Special Report Judon Fambrough” and read the paper.) • At the bottom of the permit, note that your name is on the Service List. Are you on that service list because Continental’s proposed well is too close to your minerals in a divided section and/or because Continental’s attempt to contact you failed? • Also see the Notice of Application and the Publishing Instructions. The publishing instructions, in part, reads, “The Drilling Permit Unit has reviewed your application for well permit filed on Railroad Commission Form W-1 with attached plat. We thank you for furnishing the names and addresses of the offsetting operators, lessees, and/or mineral interest owners to your leased tract. The Railroad Commission of Texas is required by law to notify all operators and lessees, or in the event of unleased acreage, the mineral interest owner(s) of each tract potentially affected by your application. As you have an offsetting or affected operator, lessee and/or mineral interest owner to your tract whom you cannot locate, you must give notice by publication.” • It seems as though the prudent course of action at this moment would be watchful waiting while you collect more information or get a lease offer. You may also be faced with deciding whether to appear in person or by proxy at the RRC hearing. • I wonder if Continental Resources considers this a wildcat well on Tier 3 acreage due Jackrabbit’s shallower depth of 10,500’ (as compared to the Woodford well just to the north? Note that Continental calls this the Ruppel (Woodford) while Saddleback’s Bruce Bar well is Emperor (Woodford Shale). Also note that Continental Resources appears to have two good producing Ruppel (Woodford) wells in a different part of Winkler county. I believe you can find a relatively recent interview with Continental Resources’ CEO and founder Harold Hamm in which he discusses Tier 3 acreage. • Collect the opinions of others and seek out professional advice before moving forward.

Many thanks for your information, My deed describes my property as, Sec 13 and 14 School lands block A 56. I have 52/1728 or 1280 acres or 38.15184 net acreage. I am in the undivided category.

I must wait for response from continental at this time to see if they want to lease me.

You are welcome. Please do consider reading Judon Fambrough’s paper which could be very informative if you do not lease your minerals and a well is drilled. This reminds me of the Star Trek TNG episode in which the Cytherians don’t bother with space travel, they just bring things of interest to their home planet from all over the universe.

This is the posted production for one of Continental Resources wells approximately five miles south of Wink. I am assuming this is the Delaware Basin while your minerals are on the Central Basin Platform (perhaps someone with geological knowledge will confirm or deny). It seems like the oil and gas production is strong [163,000 bo in nine months] and could explain why Continental Resources might be interested in increasing its understanding of the Woodford in Texas.
Lease Name: UTL 3748 37A , Lease No.: 59352 Well Type: Oil District: 08 Lease Production and Disposition Date Range: Dec 2022 - Nov 2023 12 results Page: 1 of 1 Page Size: [Date](javascript:doSort(‘CYCLE_MONTH’,‘ASC’)) OIL (BBL) Casinghead (MCF) Operator Name Operator No. Field Name Field No. [Production](javascript:doSort(‘OIL_PROD_VOL’,‘ASC’)) [Disposition](javascript:doSort(‘OIL_TOT_DISP’,‘ASC’)) [Production](javascript:doSort(‘CSGD_PROD_VOL’,‘ASC’)) [Disposition](javascript:doSort(‘CSGD_TOT_DISP’,‘ASC’)) Dec 2022 NO RPT NO RPT NO RPT NO RPT CONTINENTAL RESOURCES, INC. 173777 RUPPEL (WOODFORD) 78953800 Jan 2023 NO RPT NO RPT NO RPT NO RPT Feb 2023 NO RPT NO RPT NO RPT NO RPT Mar 2023 217 215 53 53 Apr 2023 14,038 13,227 227,120 227,120 May 2023 37,497 37,277 669,926 669,926 Jun 2023 26,929 26,481 506,424 506,424 Jul 2023 22,673 23,438 439,821 439,821 Aug 2023 19,719 19,878 482,160 482,160 Sep 2023 15,302 15,032 359,847 359,847 Oct 2023 13,928 14,159 367,897 367,897 Nov 2023 13,534 13,605 322,443 322,443 Total 163,837 163,312 3,375,691 3,375,691

Two more Winkler county, Texas Woodford wells permitted by Continental Resources:

Seems to be lots of interest in this area around Wink. Dawson was just out there doing seismic a few months ago. Still seeing their tape on gates and fence post.

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Thanks for the boots-on-the-ground report. Do you know if the seismic crews have been up nearer the Andrews county line?

They did some on the south and east side of Wink and also in blk 26. Not sure beyond our property. Apparently a projected delayed in 2020 due to pandemic and finally finished.

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The spud date for the Jackrabbit well was 2/7/2024!

i have received a lease bonus offer of 700/net mineral acre with 1/4 royalty. I cannot accept the lease they have offered as written, definitely not lessor friendly! This will take a bit of time to work out. Meanwhile the Jackrabbit well I assume is now being drilled. Is there any way to follow the progress of the drilling?

That is good news! I don’t know of any non-subscription services that might show drilling progress, and I don’t know if the well would already be drilled and awaiting fracking after only eighteen days. Did Continental Resources contact you directly?

CLR must have passed on leasing you and is carrying you, thereby treating your interest as a non-consenting working interest or net profits interest. This part of the county has very fragmented ownership, and I’m sure they leased the bigger interests to drill the test well. If it is a good well they will come back and lease you. If it is a bad well that doesn’t pay out, it is just another party they won’t have to pay royalties to.

He has received a lease offer since the initial post. Would this suggest that Continental Resources has finished drilling and intends to complete the well?

That or they are just cleaning up their leasehold. I bet the interest is so small it wouldn’t have a material impact on the pay decks if it was leased or not, but they are giving it a college try.

I have 19 (±) MA in section 13 which is in the southern section of the 2 sec Jackrabbit well. I am not leased yet but I hope to successfully negotiate a 1/4 royalty lease. Since the well was spudded over a month ago Continental knows by now what kind of well we have so I am negotiating with only limited knowledge. Of course, I hope we have a good well and that our lease can eventually be finalized. A fundamental question I have is how the interest is calculated on this specific well. The well is a 2 section well on 1283.8 acres. Will production percents be allocated to each section based on the penetrations in each section established after drilling and reported on a formal survey?

It sounds like good news that Continental Resources is still trying to lease your minerals. You initially posted that you received an offer of $700 with a 25% royalty. Has the royalty offer been reduced, or are you hoping to negotiate more favorable language elsewhere in the lease? Wouldn’t your lease have some impact on the way your royalty is calculated and paid? 19 nma seems large enough to justify seeking the services of an oil and gas attorney.


The permit for the Jackrabbit 1308A indicates Continental permitted it as an allocation well.

In case you haven’t seen the plat Continental filed with their permit application I’m attaching it below. You’ll see the projected path of the horizontal leg running up the far east side of Section 13 and Section 8 that joins it on the north.

If you aren’t familiar with the type allocation wells being drilled in Texas you can use the Looking Glass feature at the top right of this page to search for previous posts about them. You’ll find a bunch.

If the undivided interest you own covers all of Section 13 then it seems logical you should have some share in that Jackrabbit well, but the amount may depend on the formula Continental elects to use in allocating the production. Allocation methods can vary between operators, with some based on the number of feet of the horizontal leg that physically cross your interest relative to the overall length of the lateral, and others calculated on the number of perforations within your interest versus the total number of take points in the lateral. In any case, production from allocation wells is handled very differently than wells drilled in pooled units.

Texas Railroad Commission, that is supposed to regulate oil activity in Texas, so far has given operators a free run in deciding how allocation should be handled. The permits state that they are leaving it up to the courts to decide if it is done correctly. Although allocation wells have been common in Texas for several years, the first case directly involving them recently reached the Texas Surpreme Court. Something may decided this year. But my guess is, at the most, the court will tell RRC to do their job by holding hearings and following formal rulemaking procedures.

I guess I am in a category of an unleased mineral interest owner (cotenant in TX) that will have to wait to see if the well being drilled (JACKRABBIT 1308A) will have any value. I have been talking to a Continental Landman and of about 3 weeks ago, thought we had verbally agreed on a lease with bonus and some lease modifications worked out. It appears that my contact has now disappeared from the face of the earth. My calls, emails and texts are now all unanswered. Since the spud date on the well was 2/7/2024, would I be wrong from assuming that Continental has discovered during the course of their drilling that the well is not going to be a good producer? Further, to minimize any additional cost, they just turn off any future communication and assign the landman to a different project? Since drilling started before I was even able to make contact with a Continental agent, it is obvious that the company has felt no obligation to lease my 19 MA in sec 13. This seems to be a very non-professional way to conduct business but is this common in the Texas oil patch? Also can anyone tell me what if anything is happening with the well?

I think an oil company might just as readily have its landman tell you he was instructed to stop leasing. I have had it happen three times. Perhaps your landman is no longer working for the company or has had a personal crisis. Was he a contract landman or an actual employee of Continental?

How about viewing


Grantor: 432 LAND CO LLC


Recording Date: 12/15/2023

Try to find contact information for lessors with minerals in Sec 13 and perhaps reach out to some of them for information?