My dad finally was able to break a lease from 1972 in Caddo Co, SW ¼ of Sec 23, T9N, R9W. Unfortunately, he passed away a few weeks prior to the lease being broken. The Attorney that broke the lease with Spess Oil Co is now offering to try and broker a lease for us and asked if we would be willing to lease (shallow) for 3 years at $500 an acre @ 3/16. He is willing to broker this type deal for 15% of the total. He stated there is no guarantee in finding someone to lease it.
Does anyone know if this is a good deal and if there is any lease activity in this area? I am a new mineral owner (inherited through my dad) and I know nothing concerning this industry.
Thank you in advance for any assistance you can lend.
Welcome to the world of minerals! Ask any and all questions
Your acreage is on the gassy side of an oil and gas fairway some call “Anadarko Woodford”, “SCOOP/STACK” or “Merge” (where SCOOP and STACK merge). This map below shows wells that have been drilled (green/red) or permitted (yellow) since 1/1/19
The high-royalty wells will be deeper here, but also less likely to be drilled. The WOODFOD wells are more expensive towards your acreage because the formation is deeper and are more involved to drill. The MARCHAND wells are just less frequently drilled, or vertical wells and smaller. Natural gas prices in this basis have also been hit or miss depending on marketing terms the operator is able to negotiate, though COVID will probably help that situation by slowing down drilling (takeaway: commodity pricing is borderline economic to drill here).
I’d have some questions:
What depth is the attorney considering shallow? The MARCHAND reservoir is the best “shallow” reservoir in the area and that’s at ~10,500’ TVD. WOODFORD would be ~13,000-14,000’ TVD
Do you own all depths? or has there been any separation?
An attorney brokering a land deal seems like the most expensive way to do it. 15% seems high to me, but makes sense since he’s an attorney. Could anyone else weigh-in here?
I would get a very specific answer as to “15% of the total”! Does that mean 15% of the lease bonus or 15% of the lease bonus and royalty? Quite a difference in what the attorney might receive (and what you would lose). Also, if the lease is at 3/16ths, then the bonus would be higher than a lease at 1/5th. Most of us would prefer the higher royalty if we thought drilling would actually happen. So the attorney may (or may not) be looking out for your best interests. If the attorney accepts a first draft from an oil company lease, then that is probably not in the mineral owner best interest as the first offers are in the company’s best interest. Good leases require negotiation.
The last leases in section 23 were back in 2017. The last leases in the whole township were in March 2019. The last permits in the township were in 2017. This is not a very popular area at the moment.
The Attorney stated he did not know the exact footages because he’s not a geologist but he says for certain that the “shallow rights under this possible lease deal would not include the Mississippian, Hunton or Woodford formations, so those formations would remain open for leasing by another company.”
I am also going to speak with him today and find out what “15% of the total means”.
shallow rights under this possible lease deal would not include the Mississippian, Hunton or Woodford formations, so those formations would remain open for leasing by another company.
Caddo County is one of the few counties that is NOT online. One would have to make a trip to Anadarko for a quick check of the area around 23-9-9. Court House may also have Covid restrictions of some sort.
