I just received an offer to sell my mineral rights for a sum that is too large to ignore. I know they are drilling new wells in both sections. Anyone know what is up? Can anyone recommend an appraiser to help me make an informed decision?
Thanks,
Jill
Jill.
What township and range?
Do you have a lease?
Daniel A. Thompson said:
Jill.
What township and range?
Section 8- 5S - 6E, Section 17-5S-6E
thx
Jill,
I think you may already have a well in section 17, drilled from section 9.
http://imaging.occeweb.com/OG/Well%20Records/1DD1AE24.pdf
I will check this out and get back to you.
Jill Evarts said:
Section 8- 5S - 6E, Section 17-5S-6E
thx
Yes, both sections have producing wells, the Calico Jack and the Jolly Roger, but they are marginal at best. New wells are being drilled on both sections.
Thanks,
Jill
JILL,
Here is a layout of the wills drilled or in the permit stage. Calico Jack has permits for 3-17H,4-17H, 5-17H and 6-17H.
http://imaging.occeweb.com/AP/CaseFiles/OCC4384470.PDF
I think you are going to have a total of 9 wells or more.
I always tell people DONT SELL. My oldest producing well has been paying me for two years and I have already received in royalties over half of the biggest dollar offer anyone has made to buy me out. And remember there are years of production to come. Selling is tempting but with natural gas prices almost back to where they were when the drilling frenzy was on, income is going up. And if gas is worth something again you are at least going to get nice lease money if no one drills for a while. Even if a well is bad, drilling is steady and someone is going to try again. I have heard and read horror stories of folks selling for the equivalent of one year of production income.
Only if I had some life or death need for cash right now would I consider selling based on my experience, which includes one failed well that was plugged and abandoned.
Has anybody been contacted about Section 4, Township 7 South, Range 5 East in Marshall County? Thanks!
What they are offering for section 17 and 8 is crazy high. I think there might be some sort of feeding frenzy going on to get the mineral rights. Are they gambling or do they have some good geological information? If I take the offer it would be the equivalent of initial peak production (which is long gone and was short lived) for 13.3 years, but the wells I believe, were a disappointment in the big scheme of things to drillers.
Jill,
My mineral interest are over in Carter Co, but the forum is so slow I spend too much time on the Stephens forum. Very active forum. I heard over there that some offers are from some who hope to flip the mineral rights and sell them to someone like XTO. If they do not get an offer, then all bets are off. So it was basically a waste of time. You know the old saying IF IT’S TOO GOOD TO BE TRUE…
You might visit the site, very informative.
Jill, if the original wells were disappointments and they are drilling not 1 exploratory, but 2 wells simultaneously, I would say they "know" something, or why drill 2 wells at once? You can't always reduce an operators actions to logic, but you can almost always follow the money. The lease is already HBP, no need to drill 2 exploratory wells simultaneously. I think they are jumping straight to production phase. I think you should try to confirm this though any nearby offset wells.
What Mr. Thompson said about the OPM other peoples money buy offers is valid, if they can't sell your minerals for a profit before having to pay you, the deal is dead.
You need cash in exchange at the time you tender acceptance / signed sale contract, of the deal or likely it is just them wanting the option to buy.
Thanks for comments. And if it sounds too good to be true, it is, is generally sound advice.
Actually, I got an offer from XTO to buy mineral rights once. If the producer wants them, why give the middle man a cut?
Also, XTO seems to be doing better and better drilling and developing their wells over time.
Maybe I should contact XTO?
Cooper,
I, too had an offer from XTO to buy my mineral rights in Carter Co. I have not figured out why the lease holder would want to own the mineral rights that they already have held by production.
I think as the previous writer said, "follow the money." If they can buy you out (or have a surrogate/middleman do it) for a low enough price they can improve their profit in the future. And they get the income from all future wells. More and more of the geological strata are proving productive so who knows how many wells could be on one section?
OK lots to learn. What are nearby off set wells? Also not quite sure how to read document Dan was nice enough to send. Is there somewhere I can go for oil and gas leasing 101. Would very much like to learn! Thanks----
Jill,
I will start Lease 101, but there is more to it.
The standard lease is 3/16 for 3 years with 2 year option. You do not want the option. The bonus money can vary and the first lease offers are pretty much low. If they offer a 'big' bonus, say at 3/16, you my counter with lower bonus at 1/5 or no bonus at 1/4. If you don't sigh a lease, then there will be FORCED POOLING, which the state gives you a choice of 3 or 4 options, based on the leases from the surrounding area. If you are pretty confined the is oil there and they will drill, you will be ahead by skipping the bonus and taking a bigger royalty percentage.
You do not want to participate in the well. These wells cost around $7 million to drill and can be very expensive. Also they make you pay as they go
In the lease try to get 'GROSS PRODUCTION AT THE WELL HEAD'. The operators and land men will have the lease state 'NET PRODUCTION', which means you will be paying for some production.
Try to get a 'DEPTH CLAUSE' and word it so the lease is only for the producing formations, not for every formation under your mineral rights. This way you could lease other formations to other operators.
Hopefully other will jump in a offer more information.
Also the Stephens county forum is the most active and seems to have the most knowledgable group. You might ask about leases on that forum.