Reeves County Permits?

[Dusty1]

Not sure I understand your questions. If an extension option isn’t included in the original lease and the lease is extended through an amendment, or in the form of a new lease, an amendment or memo should at some point get recorded in the Reeves County deed records. Like original leases what is recorded typically won’t show what was paid for the extension.

Here’s a link where you can search the Reeves County Deed Records. https://reeves.tx.publicsearch.us/

I’m not sure how that fits with your other question about whether you can lease to another company. If your current lease didn’t include an extension option and the company holding your lease is trying to negotiate an extension, you shouldn’t have to agree to their request, and in that case your lease would terminate at the end of the primary lease term. You would then be able to sign a new lease provided there is another Lessee ready to do that. But there are things to consider before deciding whether to turning down the offer to extend.

Does the company holding your lease control the other acreage around you to the point another operator won’t be interested in that area (which may depend how large a mineral interest you own)?

You don’t have to accept the current operator’s first offer. Can you negotiate a higher bonus for it, a shorter time period for the extension, or require improvement of other provisions in your original lease that would make it more appealing (which again may depend on the size of your mineral interest)?

Bottom line, don’t decline the current request unless you know it is the best you can work out with the current operator, or you have a better alternative.

[Brenda_Johnson]

The lease expired in August 2020. Trying to get a larger bonus than the 3K extension they offered… Noble has already finished the work prior to actually drilling. The lease puts the burden on Noble to drill in the 3 year term of the lease If they don’t, the lease would end. They didn’t drill until February 2021.

[TennisDaze]

Do you mean that Noble has a permit and cleared the site or that the well has already been drilled and is waiting for a frac? Especially if the well is ready for a frac, Noble/Chevron may not be willing to allow another company to participate as a non-operating working interest. In that cas, you will be worse off than being as unleaded mineral owner. If you are unleased, then all revenues attributable to your minerals will be applied toward payout, after which you will receive all revenues less the expenses. If it is a good well, then it could be a good deal. If it is not a good well, then it may never reach payout. Same situation for each well traversing your minerals. If you lease to XX Company and it does not participate (I.e. pay all drilling costs), then all revenues will still be applied to the costs and your lessee may not be willing to pay you royalties as it will not be receiving any of the revenues until after payout. You should consider consulting your attorney about this situation to be sure you make the best informed decision.

[Brenda_Johnson]

Dusty you’ve extracted the gist of my questions. I had a 3 yr lease with Noble which ended Aug 2020. No extension in lease - so they wanted to pay me for a 10 month extension. I didn’t sign it. Since Noble is a major player in this Block 13 Section 271, I wonder if another company would be interested in leasing it with a bonus. Maybe a landman would lease it and flip it to Noble or another company.

My whole point in NOT signing the lease, is to get out of the lease. Once they drill in the terms of the lease, they own you as long as it is producing. Right?

[NMoilboy]

Well, they “own” you in the sense that they will be paying you 25% of the revenue for no cost as long as they are producing. Get all the money you can from every part of the buffalo, but you want them to drill wells and pay you royalties. For the development to be a success to the operator, the royalty amount they pay you (which correlates to how much revenue the operator makes) is going to be many times the lease bonus. Leasing to the operator is the best way to make sure you get paid for your royalties.

[Dusty1]

Brenda

Totally agree with TennisDaze last comment.

We thought you were trying to make a decision between what you had referred to as extending, but appears would have been signing a new 10 month lease with Noble, or terminating and leasing to someone else

If your lease terminated last August and your mineral interest is in an area where Noble drilled a well in February, that’s a very different situation.

You are right that if a well had been drilled while you were under lease, subject to any Pugh or depth severance clauses you negotiated, that lessee would control your acreage as long as that, or future, wells in that unit were producing. You would also have been receiving royalties on that first and any other wells drilled in that unit. Professional mineral buyers sometimes joke the worst thing that could happen with interest they buy is for a well to be drilled. Sometimes there is quicker and surer return from leasing than from royalties, but when a near term possibility exists of a well being drilled where you would be included in the unit, your decisions need to made carefully.

From your comment that “Maybe a landman would lease it and flip it to Noble or another company” indicates you may think a landman (middleman) might somehow be able to lease from you on a basis you consider more appealing than you could have negotiated with Noble, but then be in a position to deal that same acreage to Noble, or some other company who could deal it to Noble, on a basis that would be acceptable to Noble and also include an acceptable profit to those middlemen. Is that logical?

If your mineral interest has now been open/available for lease for 8+ months you may already have learned what sort of new lease alternatives you have. If a release covering your prior lease hasn’t been recorded by Noble that would be logical. Check suggestions to Kizzy earlier in this same chain on March 29.

Have you confirmed your acreage is included in the unit where that February well was completed? If so, have you investigated under what kind of terms Noble, now Chevron, would allow you to currently ratify a lease? Is what you own a full mineral interest on a specific number of acres, or an undivided interest? If it’s undivided interest, do you know the lease status of those other interest owners?

If you haven’t already, use the Spy Glass feature, next to New Topics at the top of the page, to search the forum for prior discussions on the pros and cons of being an unleased mineral owner in a producing unit.

[Brenda_Johnson]

The well by Noble “Charles Goodnight” is in the acreage I own. It was listed on the Lease Extension offered - Charles Goodnight. It’s undivided interest I believe and they probably did agree to the extension. I know at least 3 of the 5 of us did extend the lease. Does that help clarify?

[NMoilboy]

So those wells were all spud in 1Q2020 and frac’d in 4Q2020. Been producing since Nov 2020. It appears. Made 635k barrels from Nov-March. Making just under 4kbd in March '21.

Let’s just assume its a 960 acre unit rather than two 480s and worrying about where in the unit your land is located. You were offered a 25% royalty lease. Average weighted oil price of $45/bo (ATAX) over that time period.

.25/960 x 635000 x $45 = $7400. That’s how much revenue you could have per nma already from Nov to March. Wells are pretty good. You should probably run the #s on being an unleased mineral owner and when payout would be, but hell CVX probably drilled and completed those wells for like $13m each cause well…Chevron and all. So payout may still be a while. But again, I don’t think shrewd bonus negotiations while ignoring royalty payment consequences are the right place to apply your shrewdness. Seems pretty easy to ask for a bit more to sign extension, sign extension, take extension check, ask for and sign DOs, get paid for suspended royalties, and then cash checks on the wells for the next 30 years. But that is me.

It’s seems so very Chevron to have leases expire between drilling a well and completing a well.

[Dusty1]

Brenda

The units Noble formed for those Goodnight wells you referred to cover Sections 265 and 266. But I thought you indicated earlier that the interest you owned was in Sec. 271? Sec. 271 appears to be controlled by Oxy who has a bunch of Young wells permitted there.

If you haven’t talked to Chevron since the point you declined their extension offer it seems logical to find out what basis they would now be willing to lease your acreage. If they aren’t interested then you need to get a release from them.

If there are other family members, or you know other mineral owners, that also own undivided mineral interest there in the same status you’re in, I’d try to get agreement with them to negotiate as a group, or at least share information if not the cost of hiring an attorney or landman to represent all of you.

[Brenda_Johnson]

The Extension is from Noble Energy for Charles Goodnight 265-266 Unit C 8H- spud March 16, 2020 Rig release March 26, 2020 Also, Extension for Charles Goodnight 265-266 Unit C 10H - spud March 26, 2020 Rig release April 9, 2020 So Chevron has taken over Noble Energy? I wouldn’t know who to contact at Chevron. All I have is the Landman’s name and info who signed the letter. I think you all are right. I should have and will still try to get a Lease Extension signed… It does me no good to be an unsigned party.

[Dusty1]

Brenda

Chevron didn’t complete the takeover of Noble until last October and I expect Noble is still handling their land functions. Here’s a letter Noble filed with RRC regarding their attempts to contact unleased mineral owners in the Goodnight C Unit. You could try contacting the Land Supervisor whose phone and email are shown in the letter.

Reeves County - Noble Energy Contact.pdf (177.2 KB)

Something is still missing though. If you’re saying your mineral interest was included in that Goodnight Unit C and that two wells were spudded there in April, 2020, but the primary term of your lease didn’t expire until August, 2020, then you should still be under lease, regardless whether you signed their proposed lease extension. Unless you have very unusual lease wording, the fact Noble had drilling operations underway in that unit months before your lease expired would have extended the term of your lease for as long as those operations continued. RRC shows both those wells were completed in November, 2020. ​

What am I missing?

[Brenda_Johnson]

I am just relaying what the Extension Letter said about being in Unit C and their dates of April 2020 and expiration date of August 2020. I can confirm the August 2020 expiration date. Then why would they offer me 2K to sign the extension through May 2021. They followed up with a higher offer of 3K to sign the lease extension. They stated that due to coronavirus circumstances they would not be able to drill in time. They alluded to the fact that they hadn’t drilled and wouldn’t be able to before the end of the lease. I don’t know much about all this.

[Dusty1]

Doesn’t add up. I’d try talking to Noble.

[Cindy_Frakes]

[email protected] Owner hotline: 800-220-5824

[Brenda_Johnson]

Thanks Cindy for Chevron contact info