Hello to the group.
My name is Steve and I joined the Forum, and now this group, in hopes of gaining insight from the experience of the group. My Wife inherited several small parcels of mineral rights in the SE corner of Logan County a few years back. The properties have been probated and the change of ownership has been recorded.
We own a 1/6 mineral interest in the Northeast Quarter of Section 23 15N 1W (160 ac.). The contract specifies the same description and refers to it as being 160 acres, more or less. However, the bonus that is attached to the contract states 160 ac. in the description but the bonus is based on slightly less than 3 acres. Can someone kindly provide the formula that establishes the mineral acres as 2.963? I would like to understand the financial terms of the lease before I discuss it with the Todco rep..
As I mentioned we have multiple parcels in SE Logan County around Evansville and Meridian in the 1W and 1E ranges. We are hoping we can get educated on this first property because we are expecting the same terms in section 14 15N 1W. I know they are already drilling in NW Logan county. Anyone have any knowledge of drilling starting up in the SE corner or are they still gathering leases for the future, or is this the next phase of the current play?
Thanks for taking the time to read my request for information. Any contribution to the thread will be deeply appreciated. I am hopeful for the future and I hope everyone profits from the current activity. I pray for rain and a snow filled winter. We need a break from this drought.
Regards,
Steve
I strongly recommend you get an oil and gas attorney. Nikki Leach in Perry is the one I use. He can help you from making some expensive mistakes. Rob
The 160 acres more or less is the size or the tract you interest is a part of . the 1/6 is your part of the 160. 160 divided by 6 = 3.1666. Penn Virginia McEnergy ,320 S. Boston Ave. ,Tulsa ,Ok.74103 and Tetra Energy, 5704 Euper Lane , Suite 100,Fort Smith , 72903 are also leasing in 15-1w . Do not take less then 3/16 royalty . There are also some terms you will need to have in you lease once you figure out who is paying the most. The forum can be of help.
Steve,
Are you sure that your wife family owned all the minerals under the 160. If you take 1/6 of 160 it would be 26.66 acres, yet they are paying you less than 1/2 of that amount. My guess is that the family only owned 50% of the minerals and the rest was held by someone else. You need to check the county clerk records or you can call Todco and ask how they came up with those acres.
You stated that they made an offer of only $200., I'm not sure what leases are going for in the SE part of Logan, but I would think it would be more like the $300. +. You can call OCC and ask Donna or Junior what leases are going for in your area. They usually have some records on property that has been leased. Also, their are lots of things you may want to mark out of a standard lease and thing you may want to put in.
So check some of the other forum/groups as their has been good discussion on that.
Good Luck.
Sorry about that interest amount I don't know how I came up with that. Virginia is correct as usual .
Ron,
Sure glad you aren't my CPA, have to kid you Ron. I also make mistakes everyday.
Steve,
I forgot to tell you, your 1/6 is undivided of the 160, so if they drill in the N 40, everyone who owns minerals in that 160 will get part of the checks. That is why the terms of 160 is used. Now, let's say they space it on 640, then you would only get 1/6 of 160 of 640. So, your percentage would be a lot less.
Thanks everyone!
Virginia, you are correct. The mineral rights are owned by my wife and her brother and there are separate but identical offers. I was trying to treat the deal as one and flubbed it.
Here's the deal. My wife and her brother share ownership of an undivided 1/6 mineral interest in the Northeast Quarter of Section 23 Township 15N Range 1W. They have been offerred a lease with a bonus of $200 an acre and 3/16 royalties. What is confusing to me based on the legal description is the value they have presented as net mineral acres. Of course I lack experience with oil and gas leases and I am likely missing some additional factor needed in the calculation, but every example I have seen the following formula is used to calculate net mineral acres.
acres / mineral interest = net mineral acres
((0.5*160)/6) = 13.3333 NMA
The bonus they are offering is based on an NMA of 1.4185 acres. What could I be missing here? This property has been in the family for many years and their records of transactions match those on record. I consider this a learning opportunity so any suggestions on how to confirm we have clear title on these mineral rights would provide an interesting project.
Thanks everyone,
Steve
Virginia Pflum said:
Steve,
Are you sure that your wife family owned all the minerals under the 160. If you take 1/6 of 160 it would be 26.66 acres, yet they are paying you less than 1/2 of that amount. My guess is that the family only owned 50% of the minerals and the rest was held by someone else. You need to check the county clerk records or you can call Todco and ask how they came up with those acres.
You stated that they made an offer of only $200., I'm not sure what leases are going for in the SE part of Logan, but I would think it would be more like the $300. +. You can call OCC and ask Donna or Junior what leases are going for in your area. They usually have some records on property that has been leased. Also, their are lots of things you may want to mark out of a standard lease and thing you may want to put in.
So check some of the other forum/groups as their has been good discussion on that.
Good Luck.
Steve,
You ask how you could research the records to understand it better, good luck on that. It takes years of experience and education to understand that. That is why they have land men and title search lawyer that only do it.
I keep thinking we are missing something on this and the only thing I come up with is maybe the farm is not a true 160 acres. Lots of farm aren't a true 160 A if they are by a county line or correction line they may be less. I have farms that are 156, 154 & one that a rail road took a few A. Leases only cover the amount of total acres, then you divide the % you have. You can go to your county assessor office and they can tell you the amount of acres in that farm.
Once you are sure of the acres, it's just plain math. Acres times bonus= total of check.
Good luck.
The transfer to your wife said 1/2 interest in the 1/6 interest in 23 in the county records .
Steve there was a well in the se/4 of the ne/4 of 23 that was plugged 8/9/12. That may have showed you interest under that 40 acres as held by production .