Reeves County, TX - Oil & Gas Discussion archives

Texas Mineral Rights Reeves County, TX
6160

Ha Ha! Ron, You are one lucky Son!

You not only inherited mineral interests you didn’t know about, but your SE/4 is the Drill Site Tract (where the Rig will be standing). With all the money that costs and what it would cost them to move it to another tract, you can probably negotiate for 3 or 4 times that $3,000 offer.

On top of that, the Permit that has been filed is for the No. 10H Well, which indicates that they intend on drilling 9 more. At least if the 10H is successful.

Give them a one (1) year primary term lease, reserve a 1/4 royalty and have (a) a Continuous Drilling Provision and (b) a Depth Severance Clause in your lease. If you don’t have those, let us know and we’ll send you some examples.

If none of the leases in your Unit have a Continuous Drilling Clause, they will more than likely just drill a single Well to hold the lands by production (HBP) and move on to another Unit. It could be a decade before they come back to drill the additional wells.

RED%20UNIT%20136-137E%20WELL%20NO.%2010H.pdf

Hope this helps -

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

6161

And you should ALWAYS have an experienced Oil and Gas Attorney review any offers you receive. If you don’t know of any, we can suggest a few.

6163

Here you go:

SAMPLE%20ADDENDUM.doc

If you own surface rights, there may be additional clauses or provisions that you will want to add regarding fences, water wells, roads, etc.

If they try to use the language “Notwithstanding anything to the contrary herein”, edit it out. It negates whatever follows it.

They may try and put it in the Header of the Addendum or at the bottom of the printed form or even in each provision or clause that you want to add.

6164

Ron,

Well 10H designation does NOT mean they are going to drill 9 more wells on your property. In any section, a maximum of 4 horizontal well can be drilled according to the spacing laws of the RRC.

But, in some places in Texas they have experimented with reentry of

a horizontal well and sending laterals out from that well in 8 different

directions. It’s called the Octopus and used just ONE location and ONE

well bore to go in 8 different directions. Clayton Williams was involved in developing the Octopus…now that Noble owns Clayton Williams operation, they may adopt the Octopus cluster horizontal well plan.

near Verhalen

6165

The Shadrach and Fiery Inferno Apache wells are southwest of Toyah in Reeves county, aren’t they? Everything from the Pecos river west

is considered to be in the Delaware Basin. And, that area has more

hydrocarbon liquids than other locations, plus high volume gas drive…so I would expect the well to ‘level off’ in 3 to 5 months after completion and keep a relatively high production level for several years.

But, the caveat is what the engineers decide to do to the well, tinkering with its production profile and ‘tweaking’ it. Many times I’ve seen engineers pull a bonehead stunt that ruined the well’s production gradient in Winkler county. So, don’t be surprised at anything…and like someone else said…NEVER count on royalty checks to maintain a certain level of income. I treat my royalties as ‘found money’ each month. It’s not in my working budget for income. I keep EVERYTHING paid for, titles

in a secure location, and have no credit cards with balances. I still manage to enjoy our royalty income. I recommend putting it into more land or a new home…but wait until you have the cash on hand to PAY

cash.

Anyone ever listen to ol’ Dave Ramsey? Debt is dumb, cash is king, and the paid off mortgage trumps a Beamer in the garage every time.

near Verhalen

6168

The whole notion of layers of shale oil is a mind blower. Let’s just say there are 5 layers. Can one well do that?

6169

Rogers and Smith…

5 layers of stacked shale plays…that’s correct. The shale is impermeable

rock that separates the ‘pay zones’. At each level the formations (folded

rock and sand) are domes, anticlines, or pinch outs…what are termed stratigraphic traps. The gas trapped in the formations provides drive to

force the hydrocarbons to the surface through the well bore. Fracking

opens fractures in the permeable sand and rock in those layers and the frack sand keeps those fissures they hydraulic fracturing does open so the hydrocarbons can more easily be extracted and flow to the lower pressure of the well bore, then to the surface. Those formations are

sandwiched or ‘stacked’ in between layers of impermeable shale rock.

And YES, a single vertical well bore can tap all 5 layers, but they can also

run laterals from that single well bore between the upper and lower shale

caps and provide a low pressure gathering line in each formation. IF all five formations flow into a single vertical well bore, it’s called downhole

commingling. If the layered formations production is kept separate

to the surface and run through separators to separate the oil and gas

produced from each zone, then the oil is put into a common stock tank and the gas goes into a common gathering line…it’s called surface commingling.

But, either way, it’s possible to determine just how much hydrocarbons and gas is produced by each of the 5 stacked plays. You should be able to ask that your royalty checks show how much came from each formation each month.

near Verhalen

6170

Yes, that’s correct because they haven’t yet tiered the mineral rights in Texas. If the well is on your property and you have mineral rights, you get royalty payments from all producing formations in the well.

In other states they are going to tiered production royalties and you have to have mineral rights to specific pay zones in the well…someone else

gets paid for the producing zones you don’t have rights to.

near Verhalen

6171

It can be quite a long time between pulling a permit and receiving any royalties. The oil company may change its mind and not drill the well, even after they have a permit approved. Even if they drill soon, it will be several months until the well is drilled and completed. Once the well is finished, you will get a Division Order in the mail, where you will confirm your percentage of the overall production (based on your acreage as a percentage of the well unit). Then you sign and send that back to the operator also confirming your address. Only then will they send you a check and let you know about any direct deposit options.

6172

JB…going north of Balmorhea on the west side of FM2903 the gas is high volume with low liquids…until you get to about 7 miles south of Toyah

and the liquids (oil, condensate, and produced water) becomes greater and greater with the volume. The Chinook wells are concentrated to

better access the hydrocarbon liquids because liquids refinement is the

most profitable part of producing an oil and gas field.

Back in the day, it used to cost 4 CENTS a gallon to produce gasoline

3 CENTS a gallon to produce diesel fuel in the gasoline plants that

used to be all over west Texas. I lived in the Dollarhide gasoline plant

and production camp in 1952 to 1956. My Dad worked for the Pure Oil Company that developed the wells around Dollarhide on the North Cowden ranch, and operated the gasoline plant. Pure merged with Union

76 in 1963 and my Dad retired from them in 1976. That gasoline plant is STILL operating…but MANY were shut down and dismantled. Now,

with the demand for fuels rising and the hurricanes proving putting refineries on the Gulf Coast to be folly, they are going to be building

many more gasoline/diesel/jet fuel plants in west Texas. Apache is

leading the pack and intends to be the biggest fuels producer in west Texas soon.

They are clustering horizontal wells to supply the big gasoline/jet fuel plants they are starting to build. Apache will go for vertical integration of all their stuff. It’s just good business thinking…and AMOCO which

became Apache has always been known for smart business thinking.

near Verhalen

6173

Lawrence and Travis, thank you for your obvious expertise! So, if you know, why do you think Primexx leased Section 36 Block 55 from the GLO in the January 2017 auction and outbid Apache by $10 million! Is this considered Alpine High as well?

6174

JB…where is Section 36 Block 55 ?? Surface directions please.

Primexx has a block of sections they are leasing up from Hwy 285 west to FM 2903 which runs across from Balmorhea to Toyah. They parallel the sections leased by Clayton Williams/now Noble Energy from Hwy 285 to FM 2903. Oxy is right in there with the two of them, leasing up

a parallel swath from Hwy 285 to FM2903. COG and Parsley have leased up from 285 to 2903 and bounded by IH10 on the south. Oxy is going to drill some wells in that area as well. Primexx is already drilling on Ivan Hurd’s land east of FM2448 and Hwy 17 about 3 miles due south of me at Verhalen and they have 3 new wells on county road 330 west of Hwy 17. Brigham is coming into the area there, too as are Diamonback, Devon, and several other companies. Everyone that can is buying up leases in that area…but the emphasis is going to shift to west of 2903 and both sides of IH20 and IH10 to where they merge. The area south of Kent, Texas is going to be drilled soon, too.

near Verhalen

6175

Lawrence, Section 36 Block 55 is between 2903 and 17, more specifically west of CR 332 and south of CR 336, Abstract 6063.

6176

The fun begins. I’m going to get my first Royalty check. Two wells and I guess they found oil.

6177

Good for you, William! Just remember that the first one or two checks will be your largest unless additional wells are drilled and they will be for a number of months, not just one, so don’t expect the same amount each month. And never, ever, ever use your royalties or interests as collateral for any kind of loan.

6179

If you mean the decline in production over the first year to 18 months, in the Eagle Ford it could be 80 to 90%. But once each well has “Settled” , they should remain fairly consistent for 20 to 30 years.

As far as the Permian and Delaware Basins, there are certainly more experienced and knowledgeable people who could answer your question, but I would imagine it would be a longer, slower decline before “Settling”.

Buddy, TennisDaze, the rest of you guys, you out there somewhere?

6180

M.Smith…you don’t need a property surface overseer/manager, do you?

Someone to document any damages to the surface you may need to get paid for. Someone to protect your interests, enforce speeds on the properties and safety compliance. ??? As I stated before, I"m retired and worthless.

Contact at

6181

Ken Haag,

The 4 D mapping I saw showed the stacked shale play, broken up by the three earthquake fault lines from Guadalupe Peak south to Star Mountain in the Davis Mountains runs north of Toyah all the way to Hwy 62/180

from Carlsbad to El Paso. The Delaware Basin stacked shale plays

are pretty much continuous from the Pecos River west to Hudspeth county and the eastern portion of it.

near Verhalen

6182

Lawrence, you have a lot of insight into what’s going on, and I appreciate your answers. Everything you comment on seems very “in the know”. But, since I am not “in the know” do you have an opinion as to why Primexx bid more than $11,000,000 on Section 36 Block 55 in the GLO auction and outbid Apache back in January?

6183

JB…There’s an enormous reservoir in 5 layers under that area…and Primexx expects to make a lot of production/make a lot of money there. So, 11 Million was not an out of line bid to lease the property given the potential profit. Apache has more than 800,000 acres leased with

similar expectations.

near Verhalen