Hello, everybody. I'm new to the Forum and new to this whole business. My family has owned 6.125 acres in the above description. We've gone for years without hearing from anyone until this past couple of months. And now we've received two offers, and other family members who own various adjacent properties to ours are receiving offers also--one who has already signed for $1,000 an acre for three years plus an option for two more, with a 3/16th royalty, but reports that others in the immediate area have received as much as $1,200. What is the cause of all of this new interest?
Currently our offers are are from David Schultz representing K-Rock Properties of Norwich Petroleum, and from T-2 Land Resources for $700 with 3/16%. Does anybody know of these outfits? And can you please advise me if I can do better than a counter-offer at the $1,000 with 3/16%.
Thank you in advance for any help you can give me.
Jay,
The first thing I look at to determine value is whether or not any poolings have been done adjacent to the acreage within the last three years. There has not been in your case. I have never heard of these companies so I am sure they think someone is going to be drilling there or they wouldn't be leasing it. I would try to determine if they want to drill or if they are leasing for another company or just wanting to participate if someone else drills. A reputable company should be open to those questions. If not, I would wait to lease. Does anyone know how close to the scoop this is?
Jay, below is a link to a presentation by Continental Resources on the part of Oklahoma they have named the SCOOP. This will give you an idea why there is interest in your minerals. Your section is on the western edge of the play in the northern half of Grady County. There is no new drilling in 7N/6W but there is a lot going on in that general area. My opinion is these offers are from people speculating on the future who will flip your lease for a profit when and if the action starts in 7N/8W. You can take the current offer and enjoy your bonus or wait a while and maybe get a better deal. Most times the lease terms can be more important than the bonus money, so before you lease seek out some expert advice and don't agree to a 2 year extension. Join the Grady County discussion group to learn more.
http://media.corporate-ir.net/media_files/irol/19/197380/CLR_Sunday_10_7_12_Anadarko_Woodford_3.pdf
Thank you Michael and Darla for your answers, it really helps me. And I'm glad I have the leeway to exclude that two year option--I didn't know if that was standard or not.
Never take a 2 year option and see if they will give you a 1/4%. Don't be in a hurry. Be patient and wait for things to heat up and you'll come out with more in the end. Almost 2 years ago I leased a section for $250, last week I got an offer from someone to lease it for $1950. Quite a difference and an expensive lesson.