Thanks to Ms. Barnes and Mr. Liles for your guidance. We own minerals in Section 35 of Blaine County and have received numerous offers to buy our interest. These offers have been rising sharply of late and, last week, we received copies of Continental's applications to increase well density and to drill horizontal wells in Sections 35 and 26. Can someone among you add to our knowledge of what this project entails and what sort of time frame we can expect for the completion of these wells?--Loy Martin
Which township and range? There are many section 35's.
Sorry. Section 35, Township 16N, Range 10 W. We also have interests in Sections 3 and 12, Township 18N, Range 11W and Section 5, Township 17N, Range 11W. All are leased and held by production--very minor royalties. Any information on the future of these areas would also be welcome.--Loy Martin
Sit back and enjoy! CLR is asking the court to approve nine additional wells in the Mississippian in 35-16N-10W. That is why you are getting all the offers.
First of all-to get caught up to date, read over the last six months of comments on the Blaine forum and you will pick up a lot of information about what is going on in Blaine. Also go to the most recent investor presentations for Q1 and Q2 from Marathon, Continental, Newfield, Cimarex and Devon to get a feel for the present and the future in this part of Blaine.
Second-in general, the court will approve the increased density motion and then it will approve each well individually. Do you know how to use the OCC website? You can follow them for free. I download digital copies of everything that pertains to my tracts.
Friend me with the blue icon at the left and I can send you directions on how to do it. Also, if you have any other questions.
After approval, the wells will be drilled one after the other most likely with the same rig. Then they may wait until all of them have been drilled to come back and do what is called a "zipper frac" when they will systematically do the completions on the nine wells at roughly the same time. They will do "part A on well A" then move over and do "part A on well B" while another "Part B operation on well A" is being done, etc. Much cheaper and efficient to do them one after another within a couple of weeks than complete each well individually before moving on to the next one to drill it. This whole process can take several months. Hopefully, by that time, well prices will come up some by late 2016 or early 2017. A few months after completion, the notices will be posted. At least five-six months after first sales, you will receive division orders in the mail. Most likely, you will get a separate one for each well since you will be paid on the percent of that well perforated in your section and each one will be slightly different. You are supposed to be paid six months after the first production month or they owe you 12% interest if title is clear. This whole process can take about a year.
Since there are going to be so many wells, you need to talk to your accountant about some financial and tax planning. The first check may contain five-six months of production from nine wells. That can throw you into a whole new tax category for a year! Be prepared, as it can hit your Medicare taxes as well. What we do is put aside 50% of the first year's production in an interest bearing (even if low) liquid account. We donate 10% to thank the Lord for allowing us to be good shepherds of the talents and treasures that He has given us. We invest (mostly) or have fun (a little) with the rest. The 50% cushion allows you to pay your federal taxes for the first year since they may be significantly higher than your were expecting! (The state taxes will be deducted from your check already). The second year you may well have to pay quarterly taxes based upon that first year even though the revenue will be down due to normal decline on the wells. The IRS doesn't care. Your quarterly is based upon the previous year, so you want to have enough in reserve. The remainder of your checks will usually have one month's revenue. Once you have about two years of revenue under your belt (and the wells have gotten past their early steep decline) you will have a better idea of your regular income and can plan accordingly with your accountant. That third year, you sometimes get a refund back because you paid too much the year before. Get help from your accountant early.
Does that answer your questions enough at this point? I will look up your other areas next.
Martha
Not much activity on 18N-11W. Marathon has a well in 11, so that might lead to more.
The southern part of 17N-11W has more activity than the northern half, so time will tell. 17N-10 west is pretty active, so might spread west a bit. The southern part of Blaine county is more active than the northern part.
Martha - even though I am a "newbie" to all of this I feel like I have learned much from reading your posts. Sorry for my ignorance but what does the future of 29-16N-11W look like? We are getting steady offers and have a hard time deciding on how much to sell (if any). Is there a crystal ball I can view to predict what 1/8 royalty on 16 acres would look like?
I realize that there are numerous factors that play into a "prediction" but was wondering
Friend me and I can help you with a "ballpark" estimate. I have a spreadsheet that I designed to help with that very question.
Awesome - thanks!
Martha,
This amazingly generous reply is maybe the nicest thing anyone has done for me all year. Thank you so much. As you suggest, I'll attempt to "friend" you but that sounds like I would have to be on Facebook or some such. I've studiously stayed away from social media but I'll see what seems to be required. Like Mr. Dingman I would love to know what kind of royalties we might be looking at from these properties. My wife and I will both be retired in a few years and even the dimmest light on the future would be helpful. Again, here's a bushel of thanks for what you've already done.
Loy
The Friend here is within the forum, not out in public (I hope). I stay away from those others as well.
I usually use the Friend part to allow a private message to me and then I share my email.
Martha - I will message you my email address if that would be the best way to communicate the estimate/spreadsheet. I really appreciate your assistance!!
Does anyone know a landman that has been leasing in 17N11W i could talk to? What were the offers coming in at last winter ? Now it seems like they are 3 times higher.
There are quite a few companies leasing in 17N11W. If you want to know what is going on, read the Q1 and Q2 investor presentations for Devon, Cimarex, Continental Resources, Marathon Oil and Newfield. That is why prices are higher! Lots of reservoirs with potential for multiple wells in each section of the sweet spots.
Yes I understand a lot of activity and all about the play , I just want to talk to a few landman as specified in my previous post. Name and Phone Number
Martha, how many wells to you suspect will ultimately be drilled in section 26 of 16N 10W?
It is confusing to me. I know it looks like 9 have been asked for but then it seems I can interperate more into other zones different from these Meramec. Is that right, or just the 9 hey have requested? I would really appreciate your take on it.
Thanks,
Mike
I am making no promises since I am only reading the same investor presentations that everyone else is reading.... there are about five reservoirs in 16N-10W. Each one has its own economic value based upon its geology with relation to oil and gas prices. Right now, they will drill the one that makes the most sense. The additional 9 wells look to be in the upper and Middle Meramec. The lower Meramec is a future possibility and is being tested nearby in the Blurton and Bernhart Density plots. The Woodford is less favorable economically, but still viable and the Osage is on everyone's watch list. See p. 14 of the CLR August Investor presentation for a visual. So 10 wells on the low side-near term -
maybe 14-20 on the upside in the long run. 24 at the very wishful thinking long run.
MR. BARNES, YOU HAVE SHOWN QUITE AN OPTIMISTIC VIEW!! I WONDER HOW MANY OF YOUR MINERALS HAVE YOU PAID THIS KIND OF PRICE FOR????
I do not buy or sell, but own my own minerals and manage minerals for several LLCs and have a 40 year career as a geologist and know the area. I have personal knowledge of recent valuations in the area that range from $25,000 to over $35,000 per acre depending upon the section's geology and future potential. Just don't want mineral owners without specialized knowledge to sell for less value than the minerals are worth. All goes back to "willing and informed buyer and willing and informed seller" agreeing on a "fair" price. Most sellers do not have the level of information that the buyers do. Most of us geologists are fairly optimistic folks in general, but we do know the risks relating to geology, market, engineering, technology, politics, etc.
If I were to sell, I would want full potential value, and if I were to buy, I would want to pay as little as possible to get what I wanted. Just depends upon which side of the fence you are on....
I am getting numerous offers to buy my mineral interest on S:4, T:14N, R:12W. Martha, do you have any information on what a fair offer might be in that area? I am well aware that a buyer wants to pay the least amount, but I don't like being taken advantage of. Any information that you might be able to provide would be most helpful in deciding whether or not to sell these minerals. Thanks!