Sundance Energy pooled 32-19N-3W in Logan and rather than participate in the development, I need to elect to accept $600/acre and 1/8 Royalty, $500/acre and 3/16 Royalty, or no bonus and 1/4 Royalty. I've narrowed it down to the last two options and am wondering if anyone has any crystal ball responses to offer.
Thanks--Amy
Thanks to Ron McKenzie on this board for letting us know that you can actually choose more than one option. We did a certain amount of acres at 3/16 so we could get a little bonus $ up front and the rest at no bonus & 1/4 royalty. I think he told us they want you to go for the cash so they don't have to keep paying you so much for the length of the lease. I think people could tell you more about if it effects when they release it in 3 or however many years and on additional wells they start on your location. Sorry, I can't remember right off and have to run.
Best of luck!
If you believe they will hit a good well with this well or that there could eventually be multiple wells 1/4 is the right thing. I get a check from 9.55 acres that is about $1500 a month and I/3rd more would be significant to me. If you are very risk averse or have a lot of acres, I would say that $500 3/16 may be the way to go.
It would be really great if you could elect half 3/16 and half 1/4 royalty, a little from the best of both worlds. Outside of a dry hole, I think the well would have to be pretty poor not to eventually pay you back the $500 if you select the $0- 1/4. As the pro's say, the money is in the ground.
If you only have a couple of acres, I would suggest the $500 3/16 and not worry about it because it's probably not going to make a life changing difference. Just enjoy what you get.
Newbie snuck in ahead of me with great information, half and half I think is the way to go $500 3/16 and $0-1/4.
How many acres and your financial needs would be a factor.
I would be all in for $0 and 1/4 RI. In the long run you will come out ahead. How the well produces and the future price of the products will tell how long it will take.
On the down side; if they don't drill or it is a dry hole, you get nothing.
You'll have to weigh your needs in your decision.
The production from the well in 33 from May 2012,to the end of Feb. 2013 at $90 B & $3 MCF for gas would have paid 3/16th about $889 and 1/4th about $1185 an acre before deductions . You only get the cash bonus on the first well in the section but you get the royalty on all of them .
Thank you all for your responses. Just curious, if the pooled acreage is under lease with a company who hasn't commenced drilling, is the lessor still entitled to the bonus?
Thanks--Amy
If you are asking if your leased acreage gets another bonus because of pooling the answer is no. If you are leased or held by production you are not under the pooling .
Would the bonus and royalty consideration be passed along to the company who has leased the acreage, but not yet started drilling?
Ron McKenzie said:
If you are asking if your leased acreage gets another bonus because of pooling the answer is no. If you are leased or held by production you are not under the pooling .
Amy,
I would contact Devon and you will probably get a higher lease bonus. I am not sure how Sundance has spaced and pooled this section. From the assignments I saw in the courthouse Chesapeake and TS Dudley assigned their leases to Devon in this section and Sundance has only taken a few leases and is hard to believe that will make them majority. Looks like the 2 are fighting over this section. Devon filed a location exception for this section on 6/14/13. With the 4 wells Devon drilled next door right off the bat I would tend to lease to them plus they have had fantastic results in the Woodford out here. The miss is just an added bonus in my opinion. Good luck and hope you get the most and a great well!