I was wondering how much money is being offered to purchase mineral acres in the woodford shale area currently? Before I give any friends or relatives advice on competitive offers in the area, I figured it would be wise to see if anyone knew the dollar amounts getting thrown around the area. $2,500 per acre, $3,500 per acre?
Looking for some information
I have a few acres in Grady County that I was offered $1500 and acre for. Even though my area is quite now that offer is way low. Being in the business and dealing with reserves and their worth I understand the process and would be a reluctant seller at the numbers you mention.
Proved producing acreage is worth a whole lot more than unproved nondrilled acreage. An old rule of thumb is that the mineral acreage is worth 36 months of the royalty payments to that acreage. Decline curves come into play and the estimated amount left to be produced is a critical factor. On the unproved acreage, it's just a guessing game on it's value and no one knows that answer.
I have seen higher than that. Depending on where the minerals are I would advise them not to sell. If they are adament about selling let me know and maybe we can work something out.
I have 15 acres located in 8N 6W in Grady county and was offered $1700 per acre just after our section was forced pooled by Continental just after the first of the year. I was not looking to sale just hope they will drill in the near future, I really do not know the usual time frame after they have spent all the money to force pool our section to drill.
It just depends on the time frame. I have seen them stake a well and abondon it. Water is a HUGE issue right now (fracturing purposes). If you have a full pond it is a "gold mine" Again. . .my recommendation would be to NOT sale your minerals, but if you and/or your family feels they need to sell let me know.
The most I was offered was $3000 several months ago. I have throw all offer in the trash. One good well and you can make more in a year and with some sections with the possibility of 8 wells I would sure not sell. I have a friend who managed to buy 3 acres recently for $5000 and he was excited. Larry
If he bought three acres for $5000 ($1667 per acre) he got a really good deal.
I've personally paid anywhere from $2000/acre to $4500/acre in Blaine, Canadian, and Dewey counties for the Cana Woodford.
Some areas are better than others. Some of the wells on the western part of the play in Blaine County are very good, but they are almost pure natural gas, with very low liquids content. Although drilling is taking place there to hold leases, most companies prefer areas with high liquids content now, and there are some good areas for that. Also, the western part of the play can get extremely deep, and the wells cost more to drill.
In addition, some parts of the Cana Woodford formation are thicker than others. In the rich Tier 1 areas of Blaine and Canadian counties, it can be over 300 feet thick. In some of the outer areas, 150 feet is more common. In Caddo and Grady and Dewey county, the formation is generally not as thick.
So the best answer is that "it depends" on the location, but you can at least see the range that we're talking about. If you want to provide some specific section / township / range information, I could probably help more.
I would be interested in your comments about Grady County and the Woodford shale play there. I have just learned that there is a well in Section 29, T7N-R6W that tested 2.7 million and 500 bbl per day. I am new to this play and this seems like a pretty good well and it might have a thicker unit of the Woodford shale than you would expect in this part of the county.
There is a similar well in the southeasten corner of the County in T5N-R5W. Extending southeastward from the Tier 1 areas in Blaine and Canadian Counties would this area be considered a Tier 1 area? I happen to own a few leased mineral acres in Sec 30, T7N-R6W which prompts my question.
JW Anderson said:
I've personally paid anywhere from $2000/acre to $4500/acre in Blaine, Canadian, and Dewey counties for the Cana Woodford.
Some areas are better than others. Some of the wells on the western part of the play in Blaine County are very good, but they are almost pure natural gas, with very low liquids content. Although drilling is taking place there to hold leases, most companies prefer areas with high liquids content now, and there are some good areas for that. Also, the western part of the play can get extremely deep, and the wells cost more to drill.
In addition, some parts of the Cana Woodford formation are thicker than others. In the rich Tier 1 areas of Blaine and Canadian counties, it can be over 300 feet thick. In some of the outer areas, 150 feet is more common. In Caddo and Grady and Dewey county, the formation is generally not as thick.
So the best answer is that "it depends" on the location, but you can at least see the range that we're talking about. If you want to provide some specific section / township / range information, I could probably help more.
There are a couple of recent confirmed mineral sales for $1800/acre in this township; one of these is nearby in section 31, and the other is in section 22. However, I think this would be a lower range on any mineral values in this general area.
The Cana Woodford "core" or "tier 1" area will depend upon the particular company. Cimarex defines the "core" area as an area in the southeast part of Blaine County, the far northwest part of Caddo county, and a big circular area in the western part of Canadian County. It stops about the Grady county line, as the thickness of the formation decreases below 150 feet at that point.
However, there have been some nice inital results in Grady County. Continental, in particular, has been instrumental in extending the play. The recent Lambakis 1-11H well in 11-3N-5W extended the play some 24 miles southeast of any existing Cana well. Initially, it was rated at 4.2 MMCFPD and 110 BOPD. It is a rich gas (1350 BTU).
The well you are speaking of in section 29 is the Dana 1-29H, at 2.5 MMCFPD and 88 BOPD (not 500). In the same township, the IGO 1-27H in 27-7N-6W was just spudded on July 27th. The Ballard 1-17H in 17-7N-6W was initially rated at 869 MMCFPD and 212 BOPD.
Initial production rates can sometimes drop dramatically. The decline curve over the first several months is a more valuable aid to determining the value of a well, so it bears watching the production of these initial wells over time. But it looks like Grady county has had a lot of leasing activity, and a good future.
Let me know if I can help further.
Donald Underwood said:
I would be interested in your comments about Grady County and the Woodford shale play there. I have just learned that there is a well in Section 29, T7N-R6W that tested 2.7 million and 500 bbl per day. I am new to this play and this seems like a pretty good well and it might have a thicker unit of the Woodford shale than you would expect in this part of the county.
There is a similar well in the southeasten corner of the County in T5N-R5W. Extending southeastward from the Tier 1 areas in Blaine and Canadian Counties would this area be considered a Tier 1 area? I happen to own a few leased mineral acres in Sec 30, T7N-R6W which prompts my question.
JW Anderson said:I've personally paid anywhere from $2000/acre to $4500/acre in Blaine, Canadian, and Dewey counties for the Cana Woodford.
Some areas are better than others. Some of the wells on the western part of the play in Blaine County are very good, but they are almost pure natural gas, with very low liquids content. Although drilling is taking place there to hold leases, most companies prefer areas with high liquids content now, and there are some good areas for that. Also, the western part of the play can get extremely deep, and the wells cost more to drill.
In addition, some parts of the Cana Woodford formation are thicker than others. In the rich Tier 1 areas of Blaine and Canadian counties, it can be over 300 feet thick. In some of the outer areas, 150 feet is more common. In Caddo and Grady and Dewey county, the formation is generally not as thick.
So the best answer is that "it depends" on the location, but you can at least see the range that we're talking about. If you want to provide some specific section / township / range information, I could probably help more.
Thanks JW. I am interested in getting onto the Corporation Comission’s website and following the Grady County developments. Any guidance to use the site would be appreciated.
Here's a link:
http://www.occpermit.com/WellBrowse/
Just enter the section, township, and range and click on search.
It will bring up a list of available wells.
Click at the left (on the magnifying glass) for the well of interest.
When it brings up the well information, I usually click on "All Images".
At this point, you can click on the various images. Keep in mind that a Form 1000 is an intent to drill,
a Form 1001A is a spudding report, and Form 1002A is a well completion report, etc.
They're not especially easy to read, and not very timely.
Another easier alternative is to just watch the daily oil and gas reports in the Daily Oklahoman, which is also available onine:
http://newsok.com/search?search=oklahoma+oil+and+gas&nav=&s...
Click on the articles that say "Oil and gas prices: ...."
There you will find, on a daily basis, the "intent to drill" filings, as well as all of the completions.
Good luck.
Thanks again JW. Very useful.
JW Anderson said:
Here's a link:
http://www.occpermit.com/WellBrowse/
Just enter the section, township, and range and click on search.
It will bring up a list of available wells.
Click at the left (on the magnifying glass) for the well of interest.
When it brings up the well information, I usually click on "All Images".
At this point, you can click on the various images. Keep in mind that a Form 1000 is an intent to drill,
a Form 1001A is a spudding report, and Form 1002A is a well completion report, etc.
They're not especially easy to read, and not very timely.
Another easier alternative is to just watch the daily oil and gas reports in the Daily Oklahoman, which is also available onine:
http://newsok.com/search?search=oklahoma+oil+and+gas&nav=&s...
Click on the articles that say "Oil and gas prices: ...."
There you will find, on a daily basis, the "intent to drill" filings, as well as all of the completions.
Good luck.
I just received an offer by letter to buy our minerals in Grady County for $2100 an acre by Legacy Royalities. Has anyone herd of this company? I am not planning on selling, seems a little low since we have been forced pooled in our 640 acre section and hoping Continental will drill soon.
I have never heard of the company but there are a lot companies trying to buy royalties in this area. I received an offer of $1500 an acre in central Grady. I don't plan to sell either.
The companies buying the royalties are taking a chance on there being a well drilled associated with the acreage they have bought and how good that well will be. A general rule of thumb is that the acreage has a present value of 1/3 whatever the buying company thinks that acreage will give up in dollars over the life of the well or wells. It is a game of big winners and big losers and all tied up with estimates of production and oil and gas prices stretching out 10 years or more.
Remember, you can get more than one well in a 640 acre forced pooled unit. Some operating companies are considering 80 acre spacing in the long run which would put 8 wells in a 640. There is a lot of road to travel before you will see that close of spacing over any productive area. The productive area really has not been defined yet in Grady and other Counties in the Woodford play. There will be more productive areas and less productive areas based on the geology and the skill of the operator in completing Woodford shale wells.
Richard, Legacy is legit. They made offers to me and my 2 siblings, they sold but I held. They got their money without any problem but I don't think they got a very good deal. A couple of months later I leased to Continental for $1000/acre. They are also in the process of force pooling our section which is in Stephens County just south of Grady. Continental has completed some pretty good wells in Grady, so you are probably in a good spot. Good Luck!
Richard Pruitt said:
I just received an offer by letter to buy our minerals in Grady County for $2100 an acre by Legacy Royalities. Has anyone herd of this company? I am not planning on selling, seems a little low since we have been forced pooled in our 640 acre section and hoping Continental will drill soon.
Don, You are correct. My brother and sister sold to Legacy for $1400/acre. I made close to that by leasing.
Don Underwood said:
I have never heard of the company but there are a lot companies trying to buy royalties in this area. I received an offer of $1500 an acre in central Grady. I don't plan to sell either.
The companies buying the royalties are taking a chance on there being a well drilled associated with the acreage they have bought and how good that well will be. A general rule of thumb is that the acreage has a present value of 1/3 whatever the buying company thinks that acreage will give up in dollars over the life of the well or wells. It is a game of big winners and big losers and all tied up with estimates of production and oil and gas prices stretching out 10 years or more.
Remember, you can get more than one well in a 640 acre forced pooled unit. Some operating companies are considering 80 acre spacing in the long run which would put 8 wells in a 640. There is a lot of road to travel before you will see that close of spacing over any productive area. The productive area really has not been defined yet in Grady and other Counties in the Woodford play. There will be more productive areas and less productive areas based on the geology and the skill of the operator in completing Woodford shale wells.
Thank you for the replies, They did up there offer from around 3/2011 form $1700 TO $2100. if they do drill a well on that 640 acre that was forced pooled does that hold the lease in affect after the 3 years if they decide to space at 80 acres?
Michael Hutchison said:
Don, You are correct. My brother and sister sold to Legacy for $1400/acre. I made close to that by leasing.
Don Underwood said:I have never heard of the company but there are a lot companies trying to buy royalties in this area. I received an offer of $1500 an acre in central Grady. I don't plan to sell either.
The companies buying the royalties are taking a chance on there being a well drilled associated with the acreage they have bought and how good that well will be. A general rule of thumb is that the acreage has a present value of 1/3 whatever the buying company thinks that acreage will give up in dollars over the life of the well or wells. It is a game of big winners and big losers and all tied up with estimates of production and oil and gas prices stretching out 10 years or more.
Remember, you can get more than one well in a 640 acre forced pooled unit. Some operating companies are considering 80 acre spacing in the long run which would put 8 wells in a 640. There is a lot of road to travel before you will see that close of spacing over any productive area. The productive area really has not been defined yet in Grady and other Counties in the Woodford play. There will be more productive areas and less productive areas based on the geology and the skill of the operator in completing Woodford shale wells.
Yes, one well holds the section, even with 80 acre spacing. That’s what the oil & gas companies are busy doing right now - drilling one well per section to hold the lease. They will drill the other wells in future years as economics dictate. Meanwhile, their infrastructure is in place.
I have done a gross calculation on what one (1) mineral acre might be worth in the Woodford shale play. This is based on a well giving of 6 Bcfe of gas, meaning the combination of oil and gas produced is expressed in terms of gas only. A given well can produce considerably less or considerably more. That is the unknown and it is a big one. The price of gas per 1000 cubic feet is $4.00 which will fluculate over the estimated 10 year life span of the well.
One acre is .0015625 of a 640 section
Given a lease royalty of .1875 or 1/6, one acre is .00029 of the 640
Estimated production is 6 Bcfe @ $4/ thousand is $24,000,000 over the well's life. (this is a big guess)
One acre at .00029 X $24,000,000 = $6960 per mineral acre what the 6 Bcfe well would deliver for gross value.
The well would likely produce 33% of it's total in the first two years and the remaining 66% in the last 8 years.
A daily rate of 4,000,000 cubic feet of gas per day equivalent (initial production) at $4 per thousand would = $4.64 per mineral acre per day.
The daily rate will likely drop dramatically in the first two years and then level out.
There are costs associated with the ryoalty interests and there are state and federal taxes. The dollars above are gross dollars.