Can anyone tell me the production status by Laredo in Section 36, Block31 T2 Howard County Texas? I own 2.5 NMA under lease to Laredo and am getting a flurry of offers to buy my interest. Leads me to believe it is a valuable area. Thanks, Kirk Brown
Hi Kirk, currently the RRC GIS map shows nine shut-in horizontal wells, and four permitted horizontal wells crossing A-1184. The shut-in wells were completed in 2020, but must have been shut-in soon after completion. The permitted wells were also permitted in 2020, but are not yet shown as completed.
@KirkBrown1 PeteR is right they are all most likely flowing back or soon to be flowing back. You should see checks soon. That is the reason for the flurry of offers. If monetizing the minerals is something you want to do wait until all wells are flowing and you are receiving cashflow from them. Production is less discounted & takes out timing risks. Groups will pay up for that.
Are you saying the offers to buy will be higher once I receive cash flow from the lease? Is there any way to estimate how lucrative production might be? Thanks for your input.
Thanks Pete. Appreciate your input. I am learning but not quite savvy with the lingo. What does shut in mean and what is the approximate wait time before any royalties might be paid? I have a number of offers around 75K for the 2.5 NMA’s I own and closing in on a decision to hold or sell.
Lee Ann, what do you mean by "production is less discounted & takes out timing risks? Thank you, Kirk
Pete, Am I to understand there are nine wells drilled and 4 to be drilled on the land of which my 2.5 NMA are located and is that considered a lot of wells in one space? Thank you, Kirk
@KirkBrown1 Yes a good reservoir engineer would be able to give you monthly cashflow estimates & fair market value with current strip prices. I need to dig in more but it appears your unit is getting fully developed which is a great thing & means you won’t have to wait around for more wells to be drilled. Granted there might be opportunities for refracs & additional zones that are marginal now in the future but that could be years out.
Hi Kirk, your understanding of the status and number of the wells is correct. That number of wells in one section isn’t unheard of but it is certainly respectable. “Shut-in” wells are usually wells that are capable of producing, but are being held off for some reason… could be waiting for a better economic situation, or there could be other reasons. The timing of when these wells start or return to production is open to speculation. Obviously from the offers you’ve received some think it might happen soon, but “soon” could mean different things to different people so there is always some guesswork involved.
I’m not in a position to hire a reservoir engineer although I would like to. How much oil can a well produce? Is there anyway I can track activity/production? Will the offer prices decrease once if and when I start to see royalty checks or is now when offers to buy are likely highest? Thank you.
I am wondering it the T2 refers to tier.
I’m in section 23 Block 31 T2N and I’ve been receiving royalties for about 2 1/2 years from SM Energy. I have 2.2 mineral acres. Ive received offers to buy but ive decided not to sell because Uncle Sam would get a big chunk of that money. The royalties I receive are a nice bit of unexpected income for me since I’m retired. I don’t count on it because who knows how long it will last. I’d say if it’s worth $75k to them it’s probably worth at least that to you. If you don’t need that money just hang in there and wait for the royalties. Mine are averaging $800 a month and oil prices on the market are rising.
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