My father received an offer of $36,000 from Castlerock to purchase 10 NMA located in Caddo County: 29-09N-11W
They’re pressuring him to sign quickly which raises a red flag for me.
I’m new to this and just starting my research, trying to get up to speed.
I’ve heard that a rash of letters go out to mineral owners, just to see if anyone will bite and I’m wondering if this is what’s going on with my father.
Does this seem like a reasonable offer?
My father said he receives a very small royalty check each year (less than $100).
I see that there is some production listed on the OTC website (around 180 barrels of oil a quarter and anywhere from 84-594 MCF of natural gas a month, for the past year), but I don’t know enough to understand what it means.
The “Total Space Lease Acreage” is 640, so I think the royalty my father receives is just based on the 10 NMA he owns. Is my understanding correct?
There is also another identification for the property on the offer letter: “S/2 NE/4”
What does this mean?
A good translation for the tract would be “the southern half of the northeast quarter” of the section. The northeast quarter would be 160 acres. The southern half of that would be 80 acres. This is just a description of the tract not of net mineral acres owned.
My first reaction
The land men will try to get the property at the lowest price they can
The pressure to move fast is driven by 2 factors- they want you to accept their first offer- it’s normally a good deal for them and not a fair representation of the true market value and secondly, they want to get the property before other potential buyers do.
They know more than you do about the potential production from this section. They would not try to acquire it for the sake of the current production, so they must anticipate sufficient future production to make it worthwhile. Your royalties would rise if there is successful new production.
You have to decide based on your personal financial situation whether current cash is more important to you than regular future income.
Good luck!
Thank you Steve_Hunt for all the good advice! I appreciate you taking time to share.
I have forwarded this to my brother and we will certainly be talking to our dad. I hope we can slow him down and listen to reason.
I’m glad to see your comment about “future production” because I thought it was odd to receive a purchase offer for what seems (to me) to be such a low current production (but I’m not sure I know enough to understand production volumes).
Question: how can I find out about increased density filings that you mentioned? Please forgive my ignorance, I’m trying to catch up. I found this website by reading other postings:
http://imaging.occeweb.com/imaging/OGWellRecords.aspx
I entered “2909N11W” into the “Legal Location” field and get a list of forms. Last one is from 2018.
I also searched http://www.okenergytoday.com and found Kaiser-Francis permit to drill 2017 and completion report in 2018.
I was able to find not only the application for increased density from Kaiser-Francis, but I also see another document and public notices.
For others who may not know, I was able to use the following website, which I’ve seen mentioned in another post but I was confused about what to enter and which field(s) must be used: http://imaging.occeweb.com/imaging/OAP.aspx
I entered “201902847” into the “Case #” field and clicked the Search button. It displayed a list of related documents. The Cause number 201902847-T (that kylerb mentioned) is on each document.
Evidently a notification was sent to an old address and my father did not receive it. So this is new information to our family. Thanks again, kylerb!