We are new to the Mineral Rights Forum and are interested in learning about oil leases; and ultimately (hopefully), the production end of the oil lease business. We have property in Kansas, Phillips County, Bow Creek Northeast, S-19-T5S-R17W. We have been approached by a Landman representing Rains & Williamson Oil Co., out of Wichita, KS. In the late 1970's, this company drilled and produced a well in the same general area on our property, but has since been plugged after a few months of production. According to the Landman, the company is "re-visiting" their prior production wells. We have been presented with a lease on 160 (contiguous) acres, $20/acre; 1/8 royalty and a 3-year term. We are contemplating countering the royalty interest to 3/16 and would welcome input from others re this figure. Also, is our land considered part of the Mississippian Carbonate Play area? Thank you for your help!
IMO it will be difficult for them to agree change the the royalty ratio. If they want it badly enough they would be more likely to agree to an increased leasing fee instead. Anybody else care to comment?
Don't know much about Kansas, but the Miss. Lime play is growing in OK. Don't go for 1/8. Try for 3/16. $20 sounds very low, but my Miss Lime acreage is in OK, so might not be a good comparison. Here are some links for you to see where you sit in relation to the play.
http://www.circlestarenergy.com/projects/kansas/mississippian-formation
http://www.epmag.com/EP-Magazine/Mississippi-Lime-moves-mainstream-oil-production-two-years_101719
http://investors.sandridgeenergy.com/phoenix.zhtml?c=196066&p=irol-presentations use the 10/1/13 one
It certainly is relative to what's happening in the local area. If there is a big push for horizontal drilling you can get more. When horizontal drilling was hot in Lane county KS a couple of years ago, the companies were offering a better royalty. But now that that is over (temporarily I hope) offers on a recent lease for a traditional well were much different. Ranoa A. Fulghum seems to be referring to a traditional vertical well. But without knowing what is happening locally it's not possible to speak definitively.
Thank you--appreciate your comments.
Paul Mark said:
IMO it will be difficult for them to agree change the the royalty ratio. If they want it badly enough they would be more likely to agree to an increased leasing fee instead. Anybody else care to comment?
Thank you--the "links" are very informative!
M Barnes said:
Don't know much about Kansas, but the Miss. Lime play is growing in OK. Don't go for 1/8. Try for 3/16. $20 sounds very low, but my Miss Lime acreage is in OK, so might not be a good comparison. Here are some links for you to see where you sit in relation to the play.
http://www.circlestarenergy.com/projects/kansas/mississippian-forma...
http://www.epmag.com/EP-Magazine/Mississippi-Lime-moves-mainstream-...
http://investors.sandridgeenergy.com/phoenix.zhtml?c=196066&p=i... use the 10/1/13 one
Is that a question the Landman can answer--whether or not drilling is vertical or horizontal (as relates to the unsigned Lease Agreement). Will the Landman know details of that nature?
Paul Mark said:
It certainly is relative to what's happening in the local area. If there is a big push for horizontal drilling you can get more. When horizontal drilling was hot in Lane county KS a couple of years ago, the companies were offering a better royalty. But now that that is over (temporarily I hope) offers on a recent lease for a traditional well were much different. Ranoa A. Fulghum seems to be referring to a traditional vertical well. But without knowing what is happening locally it's not possible to speak definitively.
IMO unless they are leasing it on speculation -- hoping a big horizontal play will come along within the lease period -- it is most likely for a vertical well. Is there any horizontal well activity in your area?
I know there is a lot of "action" in the area, but I don't know if it's vertical or horizontal. My brother, who lives in the area, was talking with drillers who are drilling approximately three miles from us. He was informed they are going down 3,200 feet and then (what I believe he said was blasting). Is that the same as horizontal drilling? He was also told there are only two rigs in Kansas that are operating in this fashion. Thank you for your input. We are learning a lot of information from everyone and appreciate it very much! :-)
Paul Mark said:
IMO unless they are leasing it on speculation -- hoping a big horizontal play will come along within the lease period -- it is most likely for a vertical well. Is there any horizontal well activity in your area?
A lot of this just involves getting "educated" about something that is brand new. The forum members have been a big help to me.
Type "mississippi lime map" into Google images and you will come up with a whole selection of maps. Page through them and compare to where your acreage lies and you will get a feel for whether you are "in" or "out".
Also, as you page through, check out who posted the images and you may find out who is active, who is drilling, etc. Then go onto their investor presentations on their website and read what they are doing. You will get an idea of the flavor of the play, what is happening where, who is leasing, etc. Good way to start getting educated.
Another helpful area is the MINERAL HELP at the top of this page. It has really good info about do's and don't of leasing, etc. Go to the Garvin county page in Oklahoma and click on the Links for Mineral owners. It is mostly for OK, but maybe you Kansas folks have similar websites that you can use.
Not sure. The well in the drilling stage right now is going to 3200' and then they are bringing another rig in that will go out in 5 different directions. Does that sound like horizontal drilling?
Paul Mark said:
IMO unless they are leasing it on speculation -- hoping a big horizontal play will come along within the lease period -- it is most likely for a vertical well. Is there any horizontal well activity in your area?
Thank you! Determined we are within the Central Kansas Uplift.
M Barnes said:
Type "mississippi lime map" into Google images and you will come up with a whole selection of maps. Page through them and compare to where your acreage lies and you will get a feel for whether you are "in" or "out".
Learning a lot from your postings. Thank you very much. Our Lease arrived yesterday and the Lessee is a well known Landman in the area. From my research, it appears he will then "flip" the lease to an oil company. The family consensus is to sit tight for now and see what happens with the well down the road, possibly coming in this week.
M Barnes said:
Also, as you page through, check out who posted the images and you may find out who is active, who is drilling, etc. Then go onto their investor presentations on their website and read what they are doing. You will get an idea of the flavor of the play, what is happening where, who is leasing, etc. Good way to start getting educated.
Another helpful area is the MINERAL HELP at the top of this page. It has really good info about do's and don't of leasing, etc. Go to the Garvin county page in Oklahoma and click on the Links for Mineral owners. It is mostly for OK, but maybe you Kansas folks have similar websites that you can use.
Sure sounds like multi lateral horizontal program - but with multiple laterals like this, frac stimulation is probably out of the question. Just looking for open hole completions.
Ranoa A. Fulghum said:
Not sure. The well in the drilling stage right now is going to 3200' and then they are bringing another rig in that will go out in 5 different directions. Does that sound like horizontal drilling?
Paul Mark said:IMO unless they are leasing it on speculation -- hoping a big horizontal play will come along within the lease period -- it is most likely for a vertical well. Is there any horizontal well activity in your area?
Quite often they will go from one pad and then drill out in spokes. They can still frac. Been doing it for decades. Can you scan the well plan and post it? I may be able to tell what is going on from the casing plan and the bottom hole locations.
Wow. If I only knew how to do that! I don't know how to get the well plan. We're still trying to figure this all out. Thank you for your input. Sounds like you are well versed in this business.
M Barnes said:
Quite often they will go from one pad and then drill out in spokes. They can still frac. Been doing it for decades. Can you scan the well plan and post it? I may be able to tell what is going on from the casing plan and the bottom hole locations.
Do you know the name of the well that was drilled before? I may be able to hunt it down.
If you are new to this, be really careful about the lease terms. The first lease you receive from a land man is favorable to his interests and not to yours. Everything is negotiable, sometimes with more or less success, but being informed helps.
30 years as a geologist, so I have been on the "other side", am now on my family side doing the royalty business. Picked up a bit along the way.
The well in the drilling process now is under the name Pfannenstiel--Phillips County. And, yes, we are treading very lightly with signing the lease. Since the lessee is a well known landman in the State, our desire is to wait and see what happens with the well down the road and hold out for perhaps another offer on a lease. Thank you for your input!
M Barnes said:
Do you know the name of the well that was drilled before? I may be able to hunt it down.
If you are new to this, be really careful about the lease terms. The first lease you receive from a land man is favorable to his interests and not to yours. Everything is negotiable, sometimes with more or less success, but being informed helps.
30 years as a geologist, so I have been on the "other side", am now on my family side doing the royalty business. Picked up a bit along the way.