I am currently negotiating a lease offer in creek county S26T17NR9E… The landman said they wanted 5yrs. plus 5yr. ext. 25$ signing bonus. he said they wanted to do a horizontal well. I believe he said the company was Energy Support services? I have about 30nma I believe on the west edge of the section line. 5yrs. seems long and 25$ seems low but it is a horizontal. My question is if it is a deeper horizontal does it tie up the upper formations from anybody else wanting to drill a shallower vertical well?
There is no way I would sign a lease longer than three years with no extension. That lease you described would hold for ten years and who knows what bonus amounts would be in three years, let alone ten. You also did not mention the royalty. Is the $25 per acre at what royalty. If you lease with that company then they would hold to the center of the earth without proper editing of the lease and it would only allow drilling under the terms of the lease. It probably would tie up the shallow horizons. Also, if you ever do decide to lease, highly recommend that you get an oil and gas attorney to review any draft lease as the drafts are not usually in the mineral owner’s favor.
I always ask what they are offering for 1/8th, 3/16hs, 1/5 and 1/4th to see the range of offer. Minimum for me is usually 3/16ths and I prefer the higher royalties.
What state and county? I am assuming Creek County, OK? This five year + five year implies “speculation” to me. If this is Creek County, there has been no leasing in years. I would let this one sit out for a while until they really get serious about drilling.
That is what I thought. I countered with 18 months 3/16 and no signing bonus. I may increase to 1/5. I don’t want them tieing up them shallow zones. They are just getting started so we will wait and see. It may take years. The closest horizontal well is about 2 miles NW, drilled 3-5 years ago it came in at over 300bbls. a day. Don’t know if its still producing. Do you know what percentage or how many owners they have to sign before they pool everyone who won’t sign? If I ever need one how can I contact a good oil and gas attorney in that area?
Brett- A party must “own an interest” to file for a pooling. A mineral owner can file a pooling.
I have received a similar inquiry to the one Brett_Self spoke of. My inclination was to pass, now I’m more confident in my decision after reading your response. Thanks for the education!
The reason many of us like to pool is that it may be for a deeper horizon for horizontal drilling with one company and leaves us open to lease or pool at a shallower horizon at a different time.
You can also lease only deep rights separately from shallow rights. Large oil companies want to drill horizontal wells in deeper formations and will not develop shallow zones. Then you can lease shallow zones to a smaller company.
This topic was automatically closed after 90 days. New replies are no longer allowed.