My wife has interest in family property in western KS where interest in leasing is heating up. The family own 3 of the four quarters on one of their sections. A landsman is interested in leasing but he just informed us that Sandridge/Repol has acquired a lease on that 4th quarter and his company may no longer be interested in leasing our 3 quarters. Where does that leave us if they decide not to lease? We've had no contact from Sandridge. Will they make us an offer to lease? What if they just sit on their lease and don't drill?
Hi Mr. Mark,
Good Afternoon! First thing, as you know, is that the Mississippi Lime (Carbonate) Play is a pretty big geologic formation, so odds are good, that there is strong interest in your family property. I'd contact the owner of the 4th Quarter, and ask what the bonus money paid and contract terms (main thing is the Royalty Interest as you know) are etc. - maybe you could even get a copy of the lease (the lease will not show bonus money paid). Also find out what the length of the laterals of the horizontal well and vertical depth of the horizontal well also - if the neighbor was told and so forth. You can then figure out if your land is indeed the missing piece of the puzzle. E.g., a company plans a 5000 foot lateral on the horizontal well, Quarter section of land is 2640 feet by 2640 feet and so forth. The neighbors lease will say the Royalty Interest, the Shut-In Royalty rates, length of lease - and whether the contract can be extended beyond the time specified in the lease, contract extension term beyond the original lease, surface damages terms, access terms for pipelines, use of water wells, acreage planned for each well (both vertical and horizontal wells), & waste disposal wells (injection of wastewater, etc.). It just might be the landman is working on behalf of Sandridge/Repsol since he claims to know so much about it (that would be my hunch) - those arrangements are complicated on purpose for propriatary reasons.
I'd check with the county office that handles oil and gas leases (in Texas it is the County Clerk, I don't know who or how Kansas does it honestly), and see if they can provide a xerox of a plat map showing what company leases what property even, how about that? You need copies of the property deeds and all attachments to make sure of your mineral rights and potential royalty interests and Executive Rights (who gets to negotiate the O&G lease terms for the properties of yours). Check this excellent website for related discussions and ask away for anything you need to know, and learn want you didn't know and need to consider.
If they decide not to lease, you then find out who is leasing in the area, and contact them to see, if they are interested - you just call them up and let them know the legal description of your properties and they will get back to you, if interested or not. You should know who is leasing in the area anyways - if your neighbor is not helpful enough contact other landowners or even relatives, if they are in the area and learn what terms they received or were offered. If they sit on the lease, it may be that the longer you hold out on leasing, the bonus monies offered may increase significantly - that is something discussed on this board - I'd say contact a landman on this format (Buddy Cotten on this website has been great for my family, by the way.) When offered a lease, take it to a Oil & Gas Attorney for further review before doing anything else.
Best of Luck to you and yours!
Ralpr
Roger, thanks. This is an ongoing process involving a number of parcels (3 sections in total). The company has now upped their bonus offer (in lieu of changing the leasing contract). I'm going to start another discussion since my next question is on a slightly different theme.
Sorry, I meant Ralpr. I think I've tracked down the owner of the above mentioned quarter. However there is bad blood between him our relatives who farm the land so I'm probably not going to get any information from him. Should I contact Sandridge -- wonder how I would go about that? My wife and I are in India right now so are not able to do much except online.
No problem - just don't call me late for dinner! Well as your relatives farm the area, etc. they probably have friends or business associates that could provide them with terms received and the latest projections put forward. I'd ask them, if they can get the scoop. It has to be topic number 1 or close to it with everyone there!
Good Luck!
Ralpr
PS - Hope India is treating you and your wife as well as can be!