Has anyone recently been approached by unsolicited offers to purchase your mineral rights. We have rights in West Burleson County - SW of Caldwell - just north of Highway 21. Current offer is $4,250/net mineral acre. There is already a horizontal well there that was drilled in 2011 but is only producing about 250BBL/month. A. Dykeler Survey - Abstract A-102.
I've found that Silver Tusk has a new well 4 miles to the NW that produced 7,000 BBL in the first 12 days. Vernado and Comstock are also drilling in the vicinity and are seeing similar results. These wells are at 8,500 feet or deeper vs. our well which is at 6,500 feet.
Any other insights or opinions would be appreciated.
No surprise that you have received unsolicited offer to purchase your minerals - I get one at least monthly. There are more and more groups out there that have the funding and financial plan to pursue this option (i.e. purchase minerals).
I checked your survey - horizontal production is from the Austin Chalk with some vertical shallow Navarro sand wells also producing. Your area has been starting to get more and more active for Eagle Ford / Maness horizontal drilling. Clayton Williams, PMO, Comstock, Halcon and others are pushing this play thru Burleson County towards Lee County.
The better wells in this play tend to be located south of Highway 21 - this is due to the fact that the target section gets deeper as you move SE and production / results tend to be a lot better for a variety of technical reasons.
Although this "new" play development is still in its early stages, there are expectations of operators eventually developing these intervals at 4 to 8 wells per section.
The Silver Tusk well you mention (believe it is the Willard) is not in the EF / Maness - it is either a Chalk or Buda well (or possibly both). The Chalk and Buda are a different type of play than the Eagle Ford / Maness - AC/Buda depend on natural fractures and wells tend to be inconsistent as to results and production profiles. The EF / Maness is a more expensive play that depends on frac stimulation to tap the O&G resources - these are more consistent as to their results (and have higher per well recoveries over time for the most part versus AC / Buda completions).
Venado is very active in Lee County - well over 25 wells drilled already with lots of permits waiting on rigs. I believe that they have over 60,000 acres in the area north of Giddings.
It is up to you as to whether or not you sell your minerals - everyone has their own reasons for considering this option. Personally I would never sell minerals.
In summary, In your area, there is historical production from AC, Buda and shallow Navarro Sands with potential for the Eagle Ford / Maness to also "work".
They may be producing O&G from your minerals at different times in the future for a very long time.
That you for the detailed response! Much appreciated.
When you say that the various operators will be developing in intervals at 4 to 8 wells per section - what does a "section" mean in this context?
Also, are you suggesting that our Survey may have recoverable oil of significant volumes at each of the various levels - the AC, the Eagle Forod, the Buda and the one day when the technology improves, even deeper than that? and that each well will only be pulling from a single layer?
As far as selling, we wouldn't do it because we need the money. We'd do it simply because it's a lot of money being offered and there are no guarantees our rights will produce much (in other words like "cashing out some of our winnings" rather than letting it all ride). We're thinking we might sell 50% of our rights thinking that there is a chance another well will never be drilled in that area and we'll never get more than the $250/month that we're currently getting which could dry up in a few years. If we sell 1/2, we'd be looking at a check for over $200K and then we can watch to see if the other 50% ever pays out.
Or are we all messed up and not thinking about this correctly?? At this point is it an absolutely no-brainer that our survey will get additional producing wells - even if it's 20 years from now, that's enough for me to hold on to all of the rights - but not if there is a decent chance no producing well will ever be drilled.
We would appreciate any additional thoughts and opinions from anyone on this.
Section = 640 acres / so 4 to 8 wells per section equals 80 to 160 acres per well.
Based on the location of your survey area, there is potential for recoverable volumes of oil from the AC, Eagle Ford / Maness and Buda (as well as the shallower Navarro sands). Deeper targets that may produce in most probably the Georgetown (just below the Buda). Anything deeper than that is a long shot as to O&G as I see it right now.
Using today's technology, a well can only effectively tap / produce one horizon at a time. In some cases, once one zone plays out, the well can be recompleted to a second zone in the same wellbore.
I won't sue the term "significant" for a lot of reasons - mostly because recovery factors for any O&G in place in any formation is highly variable and subsequent volumes may vary from a few hundred barrels / MCF to well over 100,000 BO and related gas per well.
The issue here is "wait until industry develops the O&G reserves" - which may not happen in near future or at all - or sell all or some of your minerals.
There are no guarantees that any will drilled will be successful too. So not a no brainer that there will be future drilling.
Clear as mud, eh??
Your idea about selling half and keeping half may be the best way for you to proceed IMO.
Should I jump to a conclusion that you too have recently been approached to sell? If so, any details you would be willing to share would be appreciated!
The Silver Tusk well mentioned above seemed to play out after a few weeks. A second well has just been drilled approx. 500 yards from our fence line. The rig was removed within the last two weeks. Anyone heard how this second well is doing. Sure wish I could find out which direction they went?!?
Second Silver Tusk well drilled in same direction and orientation as the first one - just a bit longer as permit.
Note that you can always find this info on the Tx RRC site under permit info (i.e. plats).
Not surprised the first well petered out after a few weeks - this can be the common nature of natural fractures as they deplete if they don't have any "size"
Thanks for reply Rock Man. Very concerning since it is so close to our fence line. We have been trying to get in the game but have hit a couple of road blocks trying to figure out if our deep mineral rights were part of the original 1970's lease. Minerals above approx. 3800' are leased and currently in production.
Above 3800' are the Navarro / Taylor sands. Below that depth is Austin Chalk, Eagle Ford, Buda, etc.
L Poole said:
Thanks for reply Rock Man. Very concerning since it is so close to our fence line. We have been trying to get in the game but have hit a couple of road blocks trying to figure out if our deep mineral rights were part of the original 1970's lease. Minerals above approx. 3800' are leased and currently in production.
Yes the shallow wells have been producing since 1980's. I have personally done leg work at BC courthouse but cannot determine if deep rights were ever leased. We are entertaining hiring a certified landman and good attorney to assist.
I took a look at your location - A. Dykeler Survey - Abstract A-102. I buy a decent amount of minerals in the area. My view is that the offer price you received is fair and that you likely won't see a lot of drilling for Eagle Ford in your specific abstract for some time to come given that other areas are more attractive. I just took a look at DrillingInfo, and it generally indicated the same thing. The offer sounds pretty good to me. If I owned your minerals, I would likely sell at least a portion at that price - but it's obviously an individual decision.
Mineral owners who aren't familiar with the Texas Railroad Commission website should take the time to discover information available there. Through its GIS map feature, you can not only see if there are wells producing in areas important to you, but you can see how much production is coming from the wells. That should help you in making decisions about leasing and/or selling your mineral rights.