I, and several other family members, have a lease offer in section 10-16N-18W, Dewey County, OK. The offer is for $0.00 bonus and 1/4 royalty or $75 per NMA and 1/8 royalty. The proposal is for “recompletion operations” on an existing dormant well (API 35043-21050).
I have not yet responded, but they are pushing for a quick reply. Has a permit for this been issued or are they just wanting a quick no cost lease? Should I just do nothing and wait for a pooling order? I have never been force pooled, what are the pros and cons? Or, in this current market, what are the best bonus and royalties in this area of Dewey County. Thanks
I do not see a new permit as of today. They may or may not pool for a recompletion. Ask them which well and recompleting in which zone. Gore 10-1 matches that API number. The pool or no pool answer depends upon the particular situation for me.
Thanks Martha. Yes it is the Gore 10-1 and quoting from their proposal letter, “Encinitas proposes to set retrievable bridge plug over the Morrow formation, squeeze the Cottage Grove and Tonkawa formations, swab and perforate the Cottage Grove formation at approximately 8,330 feet to 8,360 feet, temporarily plug back with sand (or retrievable bridge plug if dry), then swab and perforate the Tonkawa formation at approximately 7,660 feet to 7,780 feet.” And yes, this well has been inactive for several years and the lease has expired, so they are pushing for a new lease.
If it were me, I would go with the 1/4. However, I would get an attorney to look at the lease because if it has post productions charges in it, that needs an edit. More clauses probably need legal eyes as well.
I do have an “EXHIBIT A” that I’ll try to get attached to the lease. It includes a depth clause, Pugh clause, post production deductions, etc.
Thanks again