I have 473 acres of mineral rights in James Hope Survey A-22…Brazos county off Hope Creek Rd. Can anyone tell me if there is anything going on there? Thanks for any info…
Linda, Post this in the Brazos County group.
I have an interest in an existing well in the Eagle Ford that is "playing out." In two months it will have been in production for two years. The production is now at 20% of what it started out at. My understanding is that "irregular" wells in shale plays will deplete by as much as 87% over a two year period.
I have several other royalty interests in properties in the Eagle Ford, and like everyone else, I get regular offers to buy them from "royalty companies." All of these offers have been laughable low ball offers, which I have put in file 13 with one exception, and that was an offer I got a few days ago for the mineral rights on the property that the aforementioned well is on. The offer was for 88 times the current monthly royalty payment. The property in question is a 350 acre plot, and it has two producing wells on it; the one mentioned above, which is an oil well, and a gas well. Of course, the oil well constitutes 90% of the royalty payment.
The only reason I can think of that anyone would offer that much for a property with a producing well on it that is already 80% depleted, is they are counting on the ppb to spike back up, and betting that more oil wells are going to be drilled on the plot. The plot is long and narrow, app. 7000' in length, and, on average, app. 2000' wide. The total length of the horizontal bore hole of the oil well is 6200' and spans all but a few hundred feet of the length of the property. My question is this: How many, if any, more wells can conceivably be drilled on a plot of this size?
My mom's wells are in Karnes County - last year for the heck of it - we submitted information to a company to see what they would offer on 3 wells... the amount was $700,000+ and they said we had to accept it in 48 hours - of course - we did not.... the next week I was looking on the RRC - saw that Marathon was going to drill 5 more wells on the locations. Sometimes I think those companies know more than we know. If I were you - I would not sell.
Depecning on the location of the first well, I would guess that at least one additional Eagle Ford well can put put on this tract.
Of course. if this is any area of Austin Chalk and/or Upper EF potential, 1-2 more laterals for each of these targets can be fit in.
And then there is the Buda below the EF - always a possibility.
And not even talking the deep Pearsall (which may be economic someday) as well as shallow Taylor / Olmos et al sands plus the Pecan Gap / Anacacho interval.
Prospectivity depends on the area.
Re-Frac'ing the present well also an option.
And the depletion you are seeing is definitely the norm for EF wells
These royalty purchasing groups are great at watching what operators are doing and probably have contacts on the inside of many groups. They also play for the "long haul".
thanks to all of you for your responses. They have been most helpful.
A friend of mine is a partial owner in one of those companies that is always making offers for royalty interests. He told me that they price to guaranty a 20% profit in the event they were to immediately flip the minerals.
The thing i would caution all is this. The offers are generally for all minerals in the county and that could include minerals not in production. They are paying for the minerals in production, and getting others for free.
I would be very reluctant to part with minerals.
I have a question for anyone who understands how horizontal wells and leases work. I own land near Pawelekville and because our family discovered some discrepancies in the exact ownership inheritance and our lease/royalties have been held in suspension for several years--oh the headache of legal negotiations---would this matter affect the decision of how the oil company we are leased to would choose to map out the various units? i.e., might they choose to avoid our property until the matters are resolved?
Thank you very much for your help.
Hi,
I own 50% of the mineral rights to a property in Dimmit county. About a decade ago, I was given a small amount of ernest money for an oil lease but the oil company let the lease lapse. The company had a hard time finding us before we were paid the ernest money, and I'm worried that we will not be contacted if there is any sort of activity that has happened on the property in the last 10 years. What is the best way for me to find out if there have been any leases or activites going on in that property. Once again, I only own mineral rights, not the rights to the land. I know that the Eagle Ford Shale has been producing quite a bit lately and it just sparked my interest.
Go the Tx RRC site and look in the GIS mapping section - find your abstract / area and you will get an idea of activity.
Do you have your abstract number?
I have received an extension offer which includes all depths including the Eagle Ford Shale. The lease as it exists includes a 25% cost free royalty. What is a reasonable range of bonus payment per acre. I hold approximately 5% of the minerals which coincidentally is 18% more than what they said I owned three years ago. Further this initial offer is $5,000 more than waht they really should be paying me from miscalculating my acres owned last time x the bonus and development penalty.
My family received $750 per acre total for a 3 year lease with one renewal option, so $250 per acre per year. The lease was renewed after the first 3 years, and royalty payments started a little over a year later. It's my understanding that it's standard practice for lease payment obligations to end when royalty payments begin, so bonus payments aren't as important as royalties, and 25% cost free is very generous. We're getting 20% with taxes and some smaller costs deducted. I don't understand why there was so much variation in your ownership %, since most of that % would have been clearly specified in your earlier purchase of the property or by your family inheritance. Many people and families came into ownership of one or more 10 acre tracts first sold & purchased in the early 1900s, and the oil company surveys showed ours to be only slightly skewed in our favor. For example, my 1/8th share in my family's 10 acres went from 1.25 acres to 1.35, but I suppose if you own a lot of acres, a similar difference could add up. What do you mean by a "development penalty"? Haven't seen that discussed anywhere during my months on this forum and another.
Must have been more than three years ago. Any knowledge of current rates on 18 month lease with 1/4 cost free royalty?
Definition of development penalty was in this case if they failed to commence drilling by a fixed date, an additional amount to be paid.
If I were in your shoes, for only 18 months preceding 7-10 years of no cost royalties at 25%, I'd let them hold it for free if they wanted to. In our case the bonus was nice to have at the time, but looking back and spreading it out over 4 years and a few months, it seems rather inconsequential now. Besides, now it seems kind of looking the gift horse in the mouth to quibble much with any oil company still wanting to lease and drill anywhere, with the price of oil so low and probably going to stay that way for quite awhile, especially with Iran back in the game.
Mr. Archer, lease terms will vary based on where your minerals are in the Eagle Ford trend. Knowing the location will shed a lot of light on what a decent bonus would be. Plus the historical practice of the operator in actually drilling successful horizontal wells - not all operators are equal in performance.
The problem with letting them have it for free, imples that they will drill which is not necessarily the case. I represent approximately 5% with each of my brothers having the same, thus we as a group have 15% and landowner has about 50%.
It seems to me that much is leased and if market conditions warrant drilling, that will take place. Now i have hears of a guy who owns 100%, does not allow seismic and takes a royalty well in excess of what most people believe is “market.”
I guess is all 100% agreed to lease for $0 bonus and 3/16 royalty, the lessee would find an oil company to drill it, provide him with an override and certainly the lessee and his assign would be happy.
They all say they are just about ready to drill, wish i had. Dollar for each time i heard that. Unfortunately many of these individuals are tieing up the land and hoping to flip it to get back their money plus a return and obtain a carried interest.
Rockman, this particular area is Dimmit County, A-149, 150, 154, and 155
This area is Dimmit County has not been great with respect to Eagle Ford completions. Section here is relatively shallow (less than 7000') so lower formation pressure (which impacts EUR). Also, total EF section on about 100' thick with the "sweet spot" only about 50' thick - so O&G in place low with respect to other areas in the trend (and when you are only looking at single digit recovery factors, oil in place is very important). EXCO has drilled numerous wells on trend to the west with very similar results - relatively low IP's with the need to major artificial lift installation within the first year. Then low (100 BOPD rates or less) as the wells move along over time. EUR's in the 200-400 MBO range (plus about 750 to 1000 CF gas per BO).
Potentially skinny economics unless operator can get their well costs down under $6 MM D&C.
EXCO frac'ing wells with about 1000 pounds per foot of section - larger fracs may help performance (but add to costs).
I found info indicating that Crimson / their brokers were paying anywhere from $500 to 1250 per net acre for 3 year leases with 2 year extensions in 2013 and 2014.
Bonus numbers would probably be less today.
That's about it on what I know about this area.
Market may have changed. I did one deal in January on an 18 month term at a bonus 20% above your low Crimson number. This deal had depth limitations thus allowing me to lease the deeper rights to another company. This company was looking for the shallow Austin Chalk oil.
I dont think Exco drilled those wells, but rather Chesapeake. Chesapeake then sold or assigned or transfered a number of wells to Exco.
This particular area is about 2,000 gross acres with very little activity due in part to difficulty in determining ownership when it was parcelled out in 10 acre tracts and sold as the "Bermuda Colony." Sounds like the Texas Rivierra. Who wouldnt want to build their retirment home here? Now it has the prospect of being above the Eagle Ford Shale play but also has Austin Chalk, Buda, Pearsall and maybe even other formations.
it is a matter of time until these minerals are worth considerably more than they are today. This giant fed intervension has been nothing but a tax on savers, a redistribution of wealth and giant social experiment. At some point all this debt has to be repaid and the only way to do that is thru dollars worth less tomorrow than they are worth today. Couple that with so much of the world that is finally becoming industrialized, with a standard of living that is increasing and you have a perfect storm for these type assets to be worth far more in the future.
What I am most surprised about is the masses fear of missing, fear of negoitating these lease offers and willingness to accept what is represented as "standard" language. These are contracts and you can negotiate anything you want. If they need you, they will come back and if you are reasonable they must keep their prospect pipeline filled.