I am a newbie, just joined the group over the weekend.
I have a very small amount of mineral rights in Section 3, Township 4 North, Range 6 West (Tract #2) in Grady County. I just got a letter from Centennial Land Company offering me $5,200 per acre. This property has only been producing about $150 a month for the past few years. I'm wondering what a fair price would be for this property. I'm reading that something is going on in the area, but not sure of the situation for my area. Please advise the best way to find out what's happening there.
Thanks!
George McCain
Vitruvian is drilling the first Cheyenne multi-unit well (sections 10 & 3) right now with at least 3 more and depending on results another 4 for a total of 8 wells. They have built a huge watershed for their frac water. The Marathon well in section 2 next to you should return about $8,642 per acre over 4 years to it's royalty owners. Multiply that by 8 wells. North of section 3, Vitruvian has made a very nice multi-unit well that will pay royalty owners $7,840 in one section and $4,007 (well is in just 1/2 of the section) in the other section over 4 years. $5,200 per acre isn't even worth considering. Just your current income alone from that section makes it worth $5,400 to $10,800 an acre. I wouldn't sell in section 3-4N-6W for $40,000 an acre, but that is just me. Those royalty checks don't stop till they plug the well and these Woodford wells may last up to 50 years. Not to mention the other formations like the Springer that the oil companies are beginning to test. Best of luck in whatever you decide.
Here is one link to look at permits, etc... http://imaging.occeweb.com/imaging/OGWellRecords.aspx
Type 051 in the API # box
Type Cheyenne in the Well Name box
Click the Search button... you should see 2 permit to drill. One well has been drilling for close to a month now. Not sure why a Notification of Well Spud has not being reported.
I will try to find some Case #'s for you tomorrow afternoon or you can go here if you want to look them up yourself... http://www.occeweb.com/Orawebapps/OCCOraWebAppsone.html
You want the Case Processing Web Application hyperlink
Here is a list of Vitruvian applications that have been filed at the Oklahoma Corporation Commission (OCC). You can look at the documents for the case numbers here... http://imaging.occeweb.com/imaging/OAP.aspx
201402179 (Multi-Unit Horizontal Well filed 3-26-14)
201402180 (Increased Density filed 3-26-14)
201402182 (Location Exception for Cheyenne 1-10X3H filed 3-26-14)
201402185 (Location Exception for Cheyenne 2-10X3H filed 3-26-14)
201402186 (Location Exception for Cheyenne 3-10X3H filed 3-26-14)
201402188 (Location Exception for Cheyenne 4-10X3H filed 3-26-14)
201402822 (Pooling filed 4-17-14)
201403802 (Rules-Exception for Cheyenne 1-10X3H filed 5-29-14)
201403804 (Rules-Exception for Cheyenne 2-10X3H filed 5-29-14)
201403806 (Rules-Exception for Cheyenne 3-10X3H filed 5-29-14)
201403808 (Rules-Exception for Cheyenne 4-10X3H filed 5-29-14)
Here is a link to Exhibit 2 from case # 201402179 that shows the first 4 wells and lines drawn for 4 more... http://imaging.occeweb.com/AP/CaseFiles/occ5098970.pdf
Okay, as I said, I am a newbie. Is the Cheyenne a kind of well type or the name of a place there? I take it that this may be some kind of fracking well type and that this could very well increase the production of oil and gas from my lease. Is this a typical scenario or does the resulting output vary quite a bit from well to well? There was some kind of legal action not long ago and I got the paperwork but didn't understand what it was really about. Any insight on what that was about?
Another question I have is how long does it take to get the tracking operation going? Is this something that is happening now or five or ten years down the line?
Thanks for your help!
George
Don Bray said:
Vitruvian is drilling the first Cheyenne multi-unit well (sections 10 & 3) right now with at least 3 more and depending on results another 4 for a total of 8 wells. They have built a huge watershed for their frac water. The Marathon well in section 2 next to you should return about $8,642 per acre over 4 years to it's royalty owners. Multiply that by 8 wells. North of section 3, Vitruvian has made a very nice multi-unit well that will pay royalty owners $7,840 in one section and $4,007 (well is in just 1/2 of the section) in the other section over 4 years. $5,200 per acre isn't even worth considering. Just your current income alone from that section makes it worth $5,400 to $10,800 an acre. I wouldn't sell in section 3-4N-6W for $40,000 an acre, but that is just me. Those royalty checks don't stop till they plug the well and these Woodford wells may last up to 50 years. Not to mention the other formations like the Springer that the oil companies are beginning to test. Best of luck in whatever you decide.
The image of the wells is very helpful. So, how does the resulting oil and gas get split up among the rights holders? Does everyone get a cut of the revenue produced or how do I know what I should be getting?
Don Bray said:
There will be 4 wells. The first well name and number is the Cheyenne 1-10X3H
Cheyenne = name
1 = number (next is 2, then 3, then 4)
10 = section 10
X = Extended lateral, i.e., covers two sections
3= section 3
H = horizontal
They should be finished drilling the first well in the next 30 days. My guess is they will slide the rig 25 feet to the east and drill the 2nd hole, which will take about 60 days. After that, they should start fracking those 2 wells and probably start production shortly after. Same scenario for wells 3 and 4. Assuming those wells are productive, they will move toward doing the same for wells 5 thru 8. I would be surprised if the whole 8 wells takes more than 1 1/2 years.
As far as the calculation of the royalty interest goes, use this guide to calculate your royalty interest.
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Take the number of mineral acres owned, and |
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divide that number by the acres in that well’s drilling or spacing unit (like 640 acres), then |
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multiply this number by the royalty received as per your oil and gas lease. |
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multiply that number by the percentage allocated to your section. |
George, if you want to catch up quickly, read the last six months of this forum and the Stephens and Garvin forums to learn about activity, leasing, force pooling, etc. Also read the investor presentations from Continental Resources, Marathon, Newfield and Apache to name a few. Go back a few days and grab Don's wonderful spreadsheets so you have them handy.