Hello. We are happy to have found this site! Our property is located using Labor and League designations, but I’ve noticed that fellow commenters use other land designations. We’ve been approached by a Landman for two of the three parcels, perhaps because they are contiguous. How would one pursue leasing the third piece?
Thanks for the help there AJ. Apparently the League number is the
same as Section number. Labors 8, 9, and 12 circled in red as well as League-Section 303.
GIS Map of Gaines County A-930/League-Section 303:
CLICK ON MAP TO ENLARGE
Clint Liles
I believe it was Bloomberg that ran an interesting story on Wolfcamp a week or so ago.
Clint, that’s a very optimistic well you have there!
Sharon
Sharon Edgar, Do you know the name of the oil company which is wanting to lease your minerals?
Hello AJ and Clint, About that Gaines County Labor 8,9,12 League 303 property we own, we’ve been offered $500 and acre from Christiansen. I don’t see them working that area now.
Congrats, Sharon! If you learn what is being targeted [San Andres; Wolfcamp; etc.] please let us know.
Thank you for this information J-F! Until finding this forum we only had the information given us by Christensen = zero. You all are Godsends. Thank you again.
Thank you for your suggestion. We will inquire.
Sharon, last month Christensen Resource Management acquired a lease as to labor 8 in league 303. (more than one person can sign a lease for the same parcel since the mineral rights can be owned by several different people together).
It looks like this was a good lease with favorable clauses for the mineral rights owner including for example a cost free 1/4 royalty, etc. Since the company has already invested in leasing some of this property you have some leverage to get good terms.
Christensen is not an operator who actually drills wells but rather a land company that assembles acreage positions to then sell on to another company. Gaines courthouse records show this company has done this with other properties in Gaines earlier this year.
Good luck and let us know what happens.
He cited areas in Gaines and Yoakum counties that could see production as technology improves output from ROZs…Melzer said operators are having success producing from those ROZs through depressurizing the formation. “Now that they’re depressurizing the formations, some of these ROZs are looking like some of the best of the shales,” he said.
http://ringenergy.com/press_releases/2016/press_120116.html
FOR IMMEDIATE RELEASE December 1, 2016
RING ENERGY INC. RELEASES UPDATE ON THREE WELL HORIZONTAL DRILLING PROGRAM
Management Announces Preliminary Capital Expenditure Budget (“CAPEX”) for 2017
Midland, TX. December 1, 2016 – Ring Energy, Inc. (NYSE MKT: REI) (“Ring”)(“Company”) released today an update on its three well horizontal San Andres program on the Company’s Central Basin Platform (“CBP”) asset.
After having had the Augustus #1H and the Tiberius #1H wells on production for approximately 45 days, the Company intends to file completion reports in the next few days showing 24 hour gross Initial Production Tests of 602 BOEPD and 448 BOEPD respectively (95% oil). The Company is not ready to release results on the Caesar #1H at this time due to the well being on production for less than 30 days, however, it is very pleased with the early production.
Per the Company’s September 22, 2016 press release, management announced that it had recently doubled its acreage position in the CBP Horizontal San Andres play to approximately 16,500 acres. This acquisition increased the Company’s potential locations to over 275 gross wells. In addition, the Company is continuing to aggressively look for prospects and acreage that complement its existing positions in both the CBP and Delaware Basin (“Delaware”)
Preliminary Capital Expenditure Budget (“CAPEX”) for 2017
The Company also announced today a preliminary capital expenditure budget (“CAPEX”) for 2017of approximately $70 million. Based on the initial results of the Company’s three well horizontal drilling program, the majority of the 2017 CAPEX will be spent on Ring’s CBP San Andres play where the Company plans on drilling 22 new horizontal wells, six new vertical wells and continued upgrading of existing infrastructure which would include the drilling of additional salt water disposal wells in support of the Company’s ongoing expansion and development of its horizontal drilling program…
"
For the laterals themselves, Hall’s analysis showed shorter laterals are better than longer. A 1 1/2-mile lateral had a recovery of 50,000 barrels per 1,000 feet of perforated lateral, while 1-mile laterals had a recovery of 70,000 barrels. Also, oil cuts were higher on average in shorter lateral wells.
Hall hypothesized that the depressurization is less per foot in a 1 1/2- mile lateral than it is for a 1-mile lateral.
“This is one of the few cases where drilling shorter laterals might be better when planning and developing than drilling longer laterals,” he said."
SAN ANDRES FORMATION RESIDUAL OIL ZONES AND THEIR RELATIONSHIP TO T…
Page 2 of 5: Abstract
The new understanding of the origins of residual oil zones (ROZs) is providing insights as to the explanation for the growing number of commercial horizontal well exploitation projects in the San Andres formation of the northern shelf area in the Permian Basin. The case will be made that what started out as a tight carbonate play, using production concepts analogous to the shale plays, has morphed into a ‘greenfield’ ROZ play at considerable distances away from the San Andres fields and in places where the landscape has been dotted with dry or disappointing vertical wells over the course of 60 years. To understand the targeted reservoir requires a study of the processes involved in the natural sweep (lateral water flood) of a huge paleo oil entrapment in the San Andres formation. The ROZ related studies began as an attempt to explain the abnormal thicknesses and properties of intervals of residual oil beneath main pay zones (MPZs) as in the Seminole and Wasson fields. The studies have now evolved to include the understanding that these residual oil resources exist in large fairways and can be made commercially attractive targets. It was first believed that enhanced oil recovery methods would be required to liberate the oil. And, to that end, several successful projects are underway in the Permian Basin proving the concept of using CO2 as the injectant to enliven and displace the oil via miscible flooding techniques. But more recently, the concept of depressuring the upper ROZ intervals has been introduced, is proving commercial at surprisingly low oil prices, and is offering insights into a process of recovery of immobile oil only conjectured in the past. What is required for producing residual oil via depressuring are the technologies and commercial developments involved in horizontal drilling and completion methods. The same revolution that occurred in the unconventional shales is being extended into carbonates and into more conventional reservoirs with no mobile oil. An analogous process has been called dewatering in Oklahoma (e.g., Hunton, Mississippian Lime) but is called depressuring here in Texas. The play’s linkage to the ROZ studies in the San Andres formation has occurred and, for that reason, is being dubbed “Depressuring the Upper ROZ” or DUROZ. The author suspects that the Oklahona plays were most generally categorized as producing the large volumes of water that freed up the mobile oil to move. Others believed the mobile oil existed in isolated reservoir compartments and that the horizontals intersected enough compartments to make the contacted rock volume commercial. Still others believed both mobile oil and water coexisted in the pore space but that the water moves first by the relative permeability nature of the two fluids. This latter concept can be reframed to the scientific principles involved with reservoir fluid depressuring and that solution gas expansion allows the hydrocarbons to expand in the pore and effectively liberate a portion of the oil and most of the gas. We believe that this scientific formulation, (as contrasted to the mathematical ‘rel perm’ one), forms the basis for explaining how gassy residual oil can be liberated. Both the EOR and DUROZ projects currently underway and producing residual oil will be presented.
Need advice from you all. I have recently inheirited mineral rights along with my 2 brothers. We share equally on all the leases. Recently we have been approached to lease our Gaines Co. 40 acres.
After some back and forth and some limited advice from a Landman I finally went back to our attorney who helped us with all the transfers of the leases. She did an extensive redline of the proposed lease and a few renegoiatings and I am satistified I have the best deal I am going to get, my brothers don’t think so. They want all the redline items of which would be company pays for all the production. They and my brothers won’t budge.
My question is can I move forward without them? Can I do any leases without them for my share? Do we just walk from this lease? We are the last acreage to sign in the 270 acres. Thanks, Kelly
Ms. Borelli, It seems like your attorney or your landman would be better able to answer your question, but I expect that you will be able to sign a lease on your minerals independent of your brothers. Are your minerals an undivided 40 acres in the 270 acre parcel? Those more expert in this forum may point out errors in my reasoning, but if the oil company has leased all of the parcel except for your family’s 40 acres, this would seem to give you considerable leverage and support your brothers’ harder line. Do you know the name of the company and the intended target(s)? Have you read my earlier posts in this thread regarding horizontal San Andres drilling?
The company who is negotiating is Cimmaron Permian. They will not disclose who the company they represent is. We have gone 3 rounds with the attorenys from both sides and they will not budge.
Is Cimmaron Permian offering you a 25% royalty? Are your minerals part of the 270 acre parcel, or are your minerals a separate tract? If separate, is it possible that they might not lease your minerals at all? That is probably a really good question for your attorney. If you have 40 undivided acres of minerals in the larger tract, and if you do not lease but company x drills and starts producing oil, it is my understanding that after the well had paid out, than you could come in as non-participating owner. At that time, I believe you would start receiving your full fractional interest as opposed to the 25% royalty. Again, I am not an attorney–ask him/her-- and have far less experience than many in this forum, so do more due diligence. It will be interesting to read what others say. In short, depending on how comfortable you are possibly foregoing a bonus and then waiting until a well pays out, you have more options than you might have realized. Please let us know what happens.
I think you should post your question in the leasing help section under “Forums”. Let’s pretend the drilling unit size is the entire 640 acres. You and your siblings own 40/640 or 1/16th = 6.25% If you sign a lease, your royalty will be 25% and you will get .25 x .0625, or 1.5625% of the hydrocarbons produced. If a horizontal San Andres well is drilled and produces 300,000 barrels of oil, you would receive payments for 4688 barrels of oil. If you choose not to sign the lease, I believe you would receive payments for 6.25% of the oil produced AFTER the well pays out. A horizontal San Andres well might pay out in a year or so, and you might ultimately receive considerably more money, e.g., 6.25% of 100,000 barrels of oil produced is more than 1.5625% of 300,000 barrels of oil. I know even less about water and processing fees. PLEASE get many other and more expert opinions, obviously including your attorney, before moving forward. I can’t imagine mystery company x is going to abandon your section which has already been almost entirely leased over 40 acres of water and processing, but it certainly could happen. Please let us know what happens.
Yes along with 3 yr, $500 per Acr. We are 40 a of 270 which is part of a total of 640 acres. they tell me they have leased all 600 and we are the last. The attorney tells me I can go my separate way from my brothers. Also we can not lease but and that is a big but! we would not be paid until all others are paid and expenses paid. That doesn’t sound good.
The sticking point is the water and processing fees.
Thanks AJ. Late yesterday we all decided to take this lease. We ran the final by our Land man friend and he says rarely, very rarely, do you get a company to pick up the costs of production. That was the sticking point and after the 3rd person to verify that we said OK, done.
I will check out the Leasing Forum as you suggest for future preparation. Also my question on signing a lease without 1 or both brothers is fine too according to my attorney.