Has anyone heard of any activity near S2 T5N-R2W, E2NE; E2W2NE; SWSWNE OR S35 (or 36) T6N-R2W, NESE; E2W2SE; W2SESE Thank you, R Gerard
36 has a horizontal well in it already. Drilled in 2018.
There has been leasing in section 2 and 35 in the last three years. Capstone Land has filed for a horizontal well in 35, & 2, 11. Activity is picking up.
We have minerals in section 11. Capstone has made an offer for “deep rights” at a sliding scale of 0-75 $/acre and 18.75-12.5 %royalty. 3 yr primary term with a 2 year option.
Should we limit the lease term explicitly to the Woodford, as that is the objective? What is the benefit of agreeing to the 2 yr option to extend? Any harm in asking for 0 bonus and 1/5? This area does not seem to have a track record for horizontal success to justify holding out for better terms. It seems the worst case is to get pooled and handed weaker terms.
This is the first lease negotiation by the new managing partners - so we want to learn as much as possible about this business.
I always ask for the 1/5th and 1/4th options even if they do not have a bonus with them. I never do a two year option. You can limit to the Woodford, but you really shouldn’t as the wellbore can wander a bit and go into the reservoir above and below. The pooling usually list the horizons above and below for that very reason. The pooling bonus amounts are likely to be very similar to these if not a bit better. You may get offers from other potential third parties. If you have never leased before, it is wise to get an attorney involved as the draft leases by the operators are not in your favor and need editing and negotiation. An investment now can really pay off in the long run if you can avoid the post production charges.
If you are new to this world, the Mineral Help tab above is helpful. The OCC website is critical, so get to know it. They also have some handouts for mineral owners.
Great reply. Thanks.
Asked for 1/5 and reply was only authorized for 3/16. What’s the second round of negotiations look like when a middle-man land broker involved? Play the waiting game, contact the operator directly, other?
You can either negotiate with the broker, wait for more offers, or wait for forced pooling (in OK). Most of the operators do not have in-house landmen anymore and are using a broker. You may have already been contacted by that broker. This is a good time to get an attorney to look over the draft lease and make suggestions for edits. Most draft leases are in the favor of the operator, not the mineral owner and need negotiation. Especially in the post production charges which could cost you a lot of royalties over the years.
If I can get a good lease with a landman, then I will sign it. If I cannot, then I have no problem going to pooling.
They are not sending the lease terms until we agree on a royalty/bonus situation.
Soooo, do I just agree to terms in order to see the lease contract? And then decide whether to sign?
I would never agree to lease bonus amounts without seeing the contract that goes with them. You can say you might consider x/y but want to see the lease contract first. If they refuse, walk away.
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