Just completed probate of mineral rights deed. The Moore 5304 13-1H well operated by Oasis Petroleum is within our spacing and we would like to set up a lease agreement with them. Does anyone have a contact at Oasis Petroleum so we can set up a deal with them, or would you suggest I just let a landman negotiate a deal with Oasis and let him/her hash it out with Oasis. I am just afraid it will take longer if I don't work directly with the well operator. Any suggestions would be appreciated and what type of offer to expect.
I was expecting a minimum of a 20% royalty, is a higher royalty the norm?
I look forward to hearing from the group.
Bob
Is leasing the only option you are looking at?
At this time, yes it is. We only have 1 acre in the 1280 spacing.
In my opinion, it is not worth it to lease 1 acre. Participate and get 100% instead of 20%
1 acre is about as low risk as it gets...especially if there is a producing well there already.
Andrew, can you explain the math of a 20% lease versus participation.
yes....you participate with the minerals you own, you receive 100% minus some chump change.
you lease....it means you sell 80% of your minerals (assuming you get 20% royalty) and hopefully $2,000 bonus acre.....your cost to participate will be somewhere near $6,500, but of course less if this well of yours has been producing......I don't lease. I participate or I am carried. I have no nightmare story to share. It has been easy so far.....I would not lease 1 acre......hopefully you will get others to opine here.....and hopefully you get someone that has participated, or has been carried, and has deeply regretted it, if they are out there, so as to hear it from someone else and not make any financial decisions based on my opinion. People that have leased, want you to lease........This is one acre we are talking about.......if it were 10 or more, then you would need to do some thinking....not for one acre....if you want, you could do nothing at all and receive 16% royalty until the operator takes what you owe it, plus 50% of the 84% of your share of the well....some just say 150% but that isn't accurate.....the 16% is cost free and isn't penalized..........crazy thing bob is, there is talk that some spacings will see 30+ wells.........that is like having 30 net acres with one good well.....guess what....you don't get a new lease or new bonus per well......you get it once....and your done.......do you want to lease potentially 30 acres for $2000 total?..........by the way.....producing well......you don't take less than $4,000 a bonus acre....
Anyway, this is me and my opinion, I am the mineral manager for just over 100nma, we have 5 wells, and I didn't lease any of the minerals....I participated in some, and am being carried in the others....I do have some Hess crap in the Tioga that was hbp back in the 1960's or something and the royalty I think is like 12%, I see a check from them once every 3 months for about $70