Compass Energy Grp sent me proposal for Seagrove Resources to drill horizontal well to test Cottage Grove formation. Section 18-12N-24W Roger Mills County OK, TBD 12-24-18 #1H. They want me to elect a cash consideration of $0 to $800 per net mineral acre with royalty of 1/5th to 1/8th. There is no time constraint mentioned. Is this a lease? My ownership is very small (2.222 acres). I do not understand what my election actually means.
Sounds like a pre pooling letter. They have to contact unleased mineral owners prior to filing forced pooling application with the OCC. Upon receiving approval from the OCC they will mail you a copy of the order which will instruct you on how and when to respond and make an election under the order.
This is not a lease and I do not sign this type of letter-ever! You do not want your signature agreeing to something before you have ever even seen the lease.
You can request to see a lease. It will probably not be in your favor and will need adjustments by a good attorney. You can also choose to wait for the force pooling which is also fine. Personally, I would choose the 1/5th royalty even though the bonus is lower. The higher royalty from a good well or wells can more than make up for the bonus payment over the life of the wells.
Charter Oak has a permit for a horizontal well that is spud in 18 and goes into 7. No royalties for 18 since no perforations in the section. BCE-MACH is also in the area.
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