I have a lease offer Sec.3-16N-9E from Circle 9 Resources through H.L. Gaston III Oil Properties. $100 per net mineral acre 3/16ths 3years. They do not state my acreage or the spacing 80 acres or 160. They want to drill vertical to the Wilcox formation about 3600ft. They are offering participation of my interest dry hole $223,200 completed $523,600 they also sent an itemized drilling and completion expenditure statement. What does this participation of interest mean? I do not know how Circle 9 makes any money they have drilled a lot in Seminole county Wilcox formation with only marginal wells 10bbls oil 2000bbls water. Are they trying to tie up the lease through production. My net mineral acres may only be 2-3 acres. Although I was payed a signing bonus for 80 acres 4 years ago. Maybe a blanket lease? Any thoughts or help would be appreciated.
Brett, that is a generic letter that is sent out. You can ignore the participation part unless you are super knowledgeable, have very deep pockets and a good accountant and lawyer. It is a hint that pooling is coming. It may be the only lease offer you receive before the pooling.
At that depth, it is probably an 80 acre or even a 40 or smaller acre lease. Probably starts out as 80 and then downsizes is another well is needed. Last pooling in the township for 2018 was by Archibald in 32 for $75 3/16ths for 10 ac spacing for the Dutcher and Glenn sands. I see lots of wells at 10 ac spacing in sec 3.
The first lease they offer you may have onerous clauses. It will probably be good to negotiate some of those out-especially if there are post production charges.
Thanks M Barnes, I did sign a lease in Sec.10 16N 9E which is right next to Sec. 3 for $102 net acre I have 43 net mineral acres This was for Archibald. I was told they were going to do a horizontal in Sec.10 I had a lawyer in Bristow tell me to strike the title warranty clause and the rest of the contract was fair. I’m not sure I want or need to sign in sec. 2 if all I have is 2-3 acres. About what would it cost for a landman to find out what my net acres are in Sec. 2 and 3 ? Would I be better off letting them pool me and waiting for division orders. Would the pooling order have to be legitimate and fair to everyone?
The landman that wants to lease will tell you how many acres you have because they have to do a title search in order to know how many you have to pay you the right amount. Free to you. He/she does the hunting. You can also get pooled. You would get paid the bonus about 30 days after the pooling. The division order comes about five months after first sales of product. Then you get paid at six months after first sales on the royalties on the well.
Thank You M Barnes.What I am looking for is pre 1950 documents that say me and my brothers do and or do not own Indian allotments . I have legal documents and can trace everything back to at least 1959 showing that I have 160 acres in Sec.2 and 3 16N 9E Signed over by great uncle to my grandad. Those were not necessarily net mineral acres.
I will be talking to H.L. Gaston this week to negotiate a deal. I’m worried more about tying up a deeper lease when we could horizontal a shallower lease. Thank you M Barnes Brett Self
They were mineral Acres but only his share of net mineral acres
Thank you very much M Barnes,
Hello Brett,
I own 100% of 85ma in 2-16n-9e creek county. My family has 15 or so similar holdings around oklahoma. I own mine third generation and have recently picked up the ball for the family in an effort to fully understand this business. I have resources in Denver that have very valuable information at times and I will keep you informed of what I find out over time. What are the odds of happening across someone in the same section?? It seems to me that M. Barnes would be a good resource too!
Ben
Activity by Circle 9 Resources in Section 3, 14, 22 in late 2018, so keep an eye open. Archibald Oil & Gas in Sec 32