my wife and I just found out we own mineral rights between shallowwater and lubbock. We were contacted by a representative for dorado petroleum. We own 106 acres of a 640 acre tract. They offer 300/acre and 15% on a 5 year lease. I’m just trying to do my homework and get some insight to make the best decision possible. Not sure if this is a fair offer. Any advice would be great, thanks
My family owns some land north of Cotton Center and we have been approached with an offer to lease our land. I have not heard of much activity in Hale County - there’s not even a “group” - so I thought I would ask here. Is there anything much going on north of Lubbock county? Our offer doesn’t compare to anything I see for those counties south and west of Hale County. We’ve been advised not to be the first to lease but I having a hard time finding out anything. I would appreciate any advice for a rookie!
On about Aril 13th Four Sevens received a permit for a horizontal sidtrack on their Teal unit. The original had the horizontal going north northwest some 6000 feet, the new permit has the sidetrack going north northeast some 4000 feet. Its an interesting development but I do not know if it is good or bad news.
A. Lawson - Correct, there has been little activity in Hale County. There is some existing production in the far SOUTHWEST corner of Hale County. If someone is offering you a lease, that is certainly good news. It may not be suprising that your offer is lower than other areas mentioned. The royalty itself (3/16, 1/5, 1/4, etc) is a major consideration, other than just the one-time bonus money that you often hear reported. I have some land very close to Hale Center, but have never had any kind of offer on it.
David - I would not agree that this is a good offer. The bonus money is fine ($300), but the royalty (15%) is unacceptable. IMO, you should never accept a royalty less than 3/16, and negotiating for 1/5 or even as much as 1/4 should be your goal. The bonus is a one-time thing, but if you get a well, the royalty itself is the important thing. Royalties like 1/8 or 1/6 or 15% are a thing of the past.
P.S. to David - Also a 5 year lease is NOT a good idea. It is more standard to do a 3 year lease, although they would love to get you to sign a 5-year lease. This should also be a negotiating point. They will often ask for 5, but accept 3.
No, it’s not that unusual. We had one property where they paid $500 per acre and failed to drill. Within a month after expiration, they turned around and paid us $850/acre for another lease. They still haven’t drilled. Now that the bottom has fallen out of natural gas prices, it’s possible they may not drill this time around either.
Although the money may sound serious, it is peanuts compared to the drilling & completion costs in many cases. For example, $500 per acre amounts to $320,000 to lease an entire section. In our case, the wells were costing around $8 million dollars each, and they were spaced such that they could drill nine wells per section. That means they could spend $72 million dollars in drilling & completion costs. The $500 bonus money is not much more than a rounding error. I realize not all wells cost this much, but you get the message.
rumor has it that yates trail mountain is about sell anyone else know anything two co looking to buy
I hear the Concho well east of Wellman is on flow back and showing some oil after just a few days. Also hearing that the Lower Cisco or Cline along with the Wolfcamp both look prospective for horizontals after several vertical pilot holes have been drilled. Not surprised about Trail Mountain as the word is that Yates is selling most or all of their properties.
I was curious if anyone has done business with Santo Petroleum (apparently affiliated with Yates Petroleum from Artesia, NM). They approached us about leasing our land and I’ve been told they have 50,000 acres under lease. I’m just hoping to connect with someone that has some experience with them.
Thanks for any help.
John Langmore
Has anyone heard any news of new activity north of Lubbock? Past Abernathy and toward Hale Center/Cotton Center?
Does anyone know anything about leases being made up all around the Lubbock city? We were approached because we own the closest private land available just west off of Marsha Sharp fwy (brownfield hwy). Signed a lease and wondering what kind of activity if any is going on? The Texas railroad commission had this posted on their website for August 2012 but I’d like to know what the word is around town…
If you check a land records system, such as TexasFile.com, it shows the following in Lubbock County:
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260 leases by Santo in 2012 alone
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136 leases by Kew Drilling in 2012 alone
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a handful of leases by Energex, Veritas, Juno, Four Sevens, Socorro, and others
There may be some other major ones that I missed.
For each of these, you can check legal descriptions, but that is a tedious process. You can certainly restrict your search to specific legal descriptions.
Four Sevens has a drilling permit for another well in the Abernathy area, this time 3 miles NW of Abernathy in the edge of Hale County:
Hale County
FOUR SEVENS OPER. CO., LTD. WILDCAT (O/G) DRILL Well# 1 PHILLIPS, 467 FWL 1978 FSL, SEC 4 BLK X, SR MERRILL/ JW DEERING SUR., A-2440 15000’, 3 NW ABERNATHY
The following link, from a seller of a large leasehold, gives a lot of good information about the leasing and geology of the new development in the Lubbock area. (You may have to register briefly in order to get to the document.)
http://www.plsx.com/dataroom/l/Mckeever/Public/Summary%20Files/1ssP…
The following map answers a lot of questions being asked on this forum about new activity and leasing in the Lubbock area. It shows the leased areas around Lubbock by KEW, Four Sevens, Empresa, etc.
http://www.plsx.com/dataroom/l/Mckeever/Public/Summary%20Files/2ssP…
Four Sevens sold their Barnett Shale properties in 2004 to XTO Energy. In 2006 they sold their newly acquired Barnett acreage and production to Chesapeake Energy and did the same again in 2007.
Wells of the depth we are talking about, with long laterals and multi-stage frac jobs can easily run $7 million per well, not the mention the infrastructure that has to be built.
You certainly have to wonder if that is the strategy here: to prove a large acreage, and attract the interest of a major who would have the resources to develop it in the timeframe required.
I would watch the Rig Drilling Report:
http://www.drillingahead.com/USARigReport
As of yesterday, it still shows Latshaw rig 15 to be in Terry County, but that has probably not been updated yet.
Many rumors of Halliburton putting an installation near Lubbock. A also heard of a company recently taking 6,000 acres north of town. Heard the well west of Idalou is ok and shut in, awaiting a pipeline perhaps? But all are rumors, so who really knows?
Enduro has now permitted three wells in Lubbock County. One is 12 miles west of town, one, 14 miles east of town and the third, 8 miles south of town.
I’m hearing that the oil companies are still trying to figure out how to design the fracs so that they wont fall off too fast, but that the oil IS there.