I own mineral rights, along with my 5 siblings, step mother, 2 aunts and uncle (10 of us total), which was passed on to us after the death of my father (7 of us including myself, siblings and step mother own my father's share). It consists of approximately 400 acres, more or less, located in Logan County at 24-18N-2W and 23-18N-2W . I received an offer (Oil & Gas Lease) April 4th, 2012 from Devon, Issued by T.S. Dudley Land Company with a signing bonus of $416.67 (did not say per acre), 3 yrs, 3/16th royalty...based on net proceeds with a defense of title clause. I refused the offer (although all of my siblings signed it) under the advice of an attorney. I counter offered and heard nothing until recently. I received three things and would love to hear everyone's input:
1)Notice of Hearing: Filed July 9, 2013. Relief Sought: Horizontal Spacing filed by Devon on 23-18N-2W. Hearing on July 29th.
2)Counter offer from Devon: Offer now through Nichols Land Services. 3 options:
a) Participate by paying your share of actual well costs.
b) Lease/Assign your rights for $400 per net acre bonus, 3 years and 1/8th royalty.
c) Lease/Assign your rights for $350 per net acre bonus, 3 years and 3/16th royalty.
3) Offer from Pentex Exploration & Producing: $2,500.00 per net mineral acre for my mineral interest in the land. They say that this offer is based upon the mineral interest being leased at a 3/16ths royalty or greater.
What does everyone think about all of this. Should I wait to be pooled? I have read in other discussions that Devon has "hit some big wells in 18N-2W" and "offers should get higher soon". What should I do here? I am in California and know nothing about the oil business. Any help would be greatly appreciated! Thanks!
Devon drilled a well from 4-18n-2w under 33-19n-2w in 12/2011 that tested 394 BOD & 746 MCF gas. from then to Feb 2013 it has produced 38,426 BO & 17,863 MCF gas . At $90 a B for the oil and $3 mcf for gas that is $3,512,000 the well was to cost $3,600,000 . In April they drilled 4 more wells from 4-18n-2w ,one under 4 that tested 733 BOD & 610 MCF, one under 5 that tested 902 BOD & 573 MCF, one under 8 that tested 350 BOD & 530 MCF , one under 9 that tested 273 BOD & 517 MCF . Devon has started the paper work for wells in sections 1 to 24 & 27,31,32,34, . I would wait for the pooling. I'll be back latter .
From what I understand with pooling, the signing bonus is off the table (because we did not sign direct with Devon) and the courts just look at royalties based on gross income. Is this true? Plus, I was always under the impression for years that these mineral rights were not worth much (my aunts always told me that another company attempted to drill in the 80s and came up dry). I know drilling equipment has come a long way since then...but I still was not sure what I was looking at here.
So you are saying that they are already producing successfully in that area? Why do you think I would get a better deal by waiting to be pooled? Or, should I counter offer with something? (Like $800 per net acre, 3 years, and 3/16th royalty based on gross income...plus have them remove the liability clause for example?) The rest of my family is upset with me because I did not take the first offer from Devon. They said it was a good offer, but the attorney I retained said otherwise and said it might make sense to wait until it is forced pooled. What do you guys think? Thanks! This is really helping me! This all has been really confusing!
Or what about counter offering with $800 per net acre, 3 years, and 3/16th royalty of half on the net mineral acres(approx. 200 acres).....and no bonus, 3 years, and 1/4 royalty on the other half (approx. 200 acres)? Remember, I own 1/7th of one share, my aunt #1 owns a share, my aunt #2 owns a share, and my uncle owns a share. Whatever royalties I will make is based on my 1/7th of one share...I don't know, this is really complicated. Am I making any sense???
Isnt this the equivalent of putting all my chips in on whether they produce or not? How about splitting it half and half? Would this be the safer bet? I am curious to see what others have been negotiating on or have settled on....
If you send me a friend request I will send you my # if you like and tell you how the poolings works. The rest of you family may be the ones that are wrong .
I'm pretty new, but hopefully someone will answer if this is correct or not. It sounds like there are 400 acres and divided into 100 acre shares and one of those is divided 7 ways, so you own 14.25 net acres. Now you could use the calculator on this site to get an idea of what your profit would be at various percentages if the well proposed produces similarly to the ones Ron mentioned above. He told me they like you to take the bonus $ because then they pay you less over the length of the production, plus if they do more wells on the property you are stuck at that lower percentage and you don't get bonus money on those wells. It depends on your situation - if you really need some cash at this moment it might be nice to go for some bonus, but in the long run you will probably earn more with a higher percentage if it looks like the wells in the area are producing nicely.
Oh, I just noticed Ron listed one for section 4 not 24 so I wouldn't assume the production would be similar. I don't follow his whole description though because then is says 33. Maybe that was supposed to be from 24-33 but that still seems like a long way. I guess I wouldn't be too confident int the production being similar unless it was in a section adjacent to mine. My understanding is that if you are pooled the court oversees it and doesn't allow all the extra junk they try to put in the lease like putting post production costs back on us. I read our pooling orders and didn't see anything like that.
So waiting for a force pooling would probably be the best option? I am assuming that taking a balance between a small amount per acre and a higher royalty split would be the best option? Yes, the offer that was sent to us was based on net proceeds and had all kinds of liability clauses in it. The attorney we retained last year said that royalties should be based on gross proceeds (not net), with all the other clauses removed...he also said it may make more sense to wait for it to be pooled. A lot of others in this section have signed leases already I think (including all of my family). Will it still be pooled if only a minority did not sign?
Also, on the list of all of the mineral rights owners listed that I received from the horizontal spacing paperwork from the court; I am listed twice. Once with my name only and once with my father with me listed in care of. None of my other family members are listed this way or are on there twice. What does this mean???
Oh newbie, thank you for breaking down my share for me! I was having difficulty figuring out how much I actually own!
Ron, I sent you a friends request. I will message you my number once you accept. Thanks!
Ron McKenzie said:
If you send me a friend request I will send you my # if you like and tell you how the poolings works. The rest of you family may be the ones that are wrong .
I agree, I asked for No Bonus for 1/4 but they would not go for that, so I got 3/16 with $450.00 bonus especially considering that it sounds like your mineral interest is not all that large, based on their offering you $416,67, sound like you own just over one acre of mineral rights??? I did not think it was worth even talking to a lawyer, I still don't.
Just over 1 acre does not sound impressive but in todays's market, that could very well put bacon in the beans. Based on my research, a 500 bod well, which is pretty good, would bring you about $750.00 monthly based on my own ownership of 1.687543429873452 (more or less LOL ) of mineral rights I own. Gas a little more, but Boone Pickens won't let it go very high yet. It will. And I also expect the market price of Oklahoma Crude to top $150.00 per barrel before long, futures show $106.00 by August, but I think it will go higher faster. Watch the Suez Canal, that is very important.
Ron McKenzie, you posted about the paperwork being filed for all the sections but I noticed in that they skipped section 33 in that. Do you know why? We are in section33 and I was just wondering why they would do 31, 32 and 34 but not 33? And was that for Township 18 2w?
Ronald, I own 1/7th of 100 acres...which I guess works out to approximately 14.25 net acres (thanks to newbie's math). I am actually listed twice on the list of respondents (one with my name and one with my fathers name with me listed "in care of") which I received from the court on the horizontal drilling....and no one else in my family is shown in this way. I don't know what this means but I am trying to get something which documents my ownership on paper so I know for sure.
This is why I thought the original offer was strange and retained an attorney. That and I do not sign anything without knowing exactly what I am signing first. T.S. Dudley originally sent the offer with a lease contract, 1099 form and draft for $416.67, a letter asking my to sign the contract, fill out the 1099 with my SS#, notarize it, and mail it back. Heck, the letter did not even give a contact number or email at T.S. Dudley to talk to someone in the event I had any questions. I was not about to give anyone my SS#, sign a contract, and mail it back to someone who would not even identify who they were and how to contact them. Weird and unprofessional. The new offer came from Nichols Land Services. I don't know if Devon dumped T.S. Dudley or what, but they did not give me warm fuzzies by any means.
ronald von wilson said:
I agree, I asked for No Bonus for 1/4 but they would not go for that, so I got 3/16 with $450.00 bonus especially considering that it sounds like your mineral interest is not all that large, based on their offering you $416,67, sound like you own just over one acre of mineral rights??? I did not think it was worth even talking to a lawyer, I still don't.
Just over 1 acre does not sound impressive but in todays's market, that could very well put bacon in the beans. Based on my research, a 500 bod well, which is pretty good, would bring you about $750.00 monthly based on my own ownership of 1.687543429873452 (more or less LOL ) of mineral rights I own. Gas a little more, but Boone Pickens won't let it go very high yet. It will. And I also expect the market price of Oklahoma Crude to top $150.00 per barrel before long, futures show $106.00 by August, but I think it will go higher faster. Watch the Suez Canal, that is very important.
Being listed twice is not all that unusual, there should also be an asterisk (*) aside each entry and the bottom asterisk explains that these are listings for "curative" purposes only, which means, of course, that it is probably not correct but will be changed at some point in the future. My own pooling order indicates one of my cousins as an aka of my Mother, which of course is in-correct and has since been corrected. When they are going back up to a hundred years, there are bound to be mistakes, and in my own case, all of the heirs are covered, (more or less,) under an original land/mineral owner years and years ago, in my case that name was Schafer, who mostly all moved to the Long Beach area of California during the depression. But we had to have documentation proving beyond question to an Oklahoma Court that the minerals belong to us and not someone else. We have plenty in the form of wills, death certificates, powers of attorney, and even a recognized Family Tree. Oddly, as Oklahoma requires probate, we did not need probate because Missouri has provisions for other execution of wills. Deep stuff.
All of the rest of my family members are listed once with just their name. Why would it list my father's name, deceased, with me "in care of". I was not the executor of his will or anything (as far as I know he did not have one). Devon originally called my step mother when they inquired about a lease, not me. I have never been "in care of" any of my father's affairs after death. You may be right. It may just be an error. Just in case I am going to attempt to get a copy of what shares I own.
Has anyone in here had any lease offers (or has entered a lease) from Devon for 23-18N-2W or 24-18N-2W? If so, could you post them? Thanks!
They can and will do better than that for a multi section lease. In this area I know they will go around 850 for more than one section. They say 450 and they cant do more because of the poolings. Tell them this is a multi section lease and it will NOT bother the pooling price they must list.
Remember, they are the ones calling you about YOUR oil not the other way around.
The offer to buy is also much lower than I have seen lately. Most offers are at least 1,000 dollars higher than the one you listed.
They combined both sections in both their offers. For a multi-section lease like this, is $850 per net acre at 3/16th a good counter offer? I also do not like how they slipped in that royalties would be based on net proceeds and they also included a liability clause the attorney said to ask to be removed.
I don't know if I should wait until the pooling because of all of this. I heard the courts based their numbers off of the gross proceeds and remove all the crazy clauses....which is good. I just don't know if I can negotiate a better deal with them directly or if it is better to wait to be pooled.
Oh, and do I understanding it correctly that they have to pay these terms (including the bonus) on each well they drill?