Karla, I was wondering the same thing. What if the formation is deeper and was allegedly unknown at the time of the lease signing. I wonder if anyone been to court over this yet? How do they count the acres? Do you have 40 acres in one layer; then 40 below in the next layer using 80 acres when considering a new lease. It would make sense; considering if two different people owned them; the oil company would have to pay both parties. The reason I was wondering is because in my unitization it has it all broke down; but in the lease it looks very different. My minerals have 6 different unitization that I own in; but I have 2 leases with 3 properties each on them. I wish they were all separate with more transparency.
The size of the unit is based on surface acreage and you own all the minerals under your part and you get paid for the minerals produced from any formation. The bonus depends on whether your lease has a depth clause. Some leases are limited to certain formations others allow for drilling of all formations without a new lease or bonus.
K…I’m thinking it might be better for you if they plugged all the existing wells on your section if they are shallow and not producing much. That way you can have your minerals released so you can lease them again to someone that is doing the deeper stuff and drilling the horizontal wells that are being drilled in the SCOOP.
The 1/8th has nothing to do with the depth clauses. Years ago when people signed leases they nearly all got 1/8% royalty in whatever was found on their particular description and number of acres and would be paid an up front bonus for that 1/8th. Then mineral owners (my dad was one of the first ones I knew of to ask for 3/16th) wised up and started asking for more percentage and would take less up front bonus to get it. This was usually when they felt pretty sure they would get a good well because if they didn’t get a good well of course they had lost the better bonus. However, there was a lot more risk of getting a dry hole then than now with the 3D siecmagraph (sp?) equipment they use these days. They did log the wells but couldn’t see what was down there like they do now. Now days when you get lease papers they usually give you a choice of getting 1/8 and a certain amount of up front bonus or 3/16 and a smaller bonus or 1/5 with still smaller bonus and usually 1/4 if offered with 0 bonus but even now as mineral owners have gotten more informed they asked and get even a small bonus with the 1/4 percentage. On the horizontal wells they are drilling now they are usually on a 640 spacing which means that no matter where on the 640 acres (which makes up one section) they drill you will get the percentage you signed for on your lease (or in your case whatever the original leasee signed for). This may have been a long lost relative of yours years ago. Most of the original old leases didn’t have depth clauses so any well no matter how deep holds by production all your mineral rights until they are plugged and abandoned. I’m sure this is clear as mud as I can usually take something simple and make it complicated but I really mean well. lol Hope it helps and sorry about any confusion I may have caused this morning. 
Have a blessed day anyway!!!
I’ve traded cars so until I get this one worn out some I probably won’t be going to the diggings in it. I’ll have to wait for hubby to take me in his truck (which with my recent back surgery I have to be helped into) or little Mazda Miata car (which I have to be helped out of). (giggling):)
If we get down there I’ll report!
Nice!
FYI. Have a lease offer from Echo on 34-2n-4w. 1750 at 1/4 and 2750 at 1/5 and agreement on our clauses.
Thanks soonerpe…I’m just glad Kirk got such a good offer on that section. Hopefully Echo knows some action is about to take place!!!
I posted this a few days ago but didn’t get any response. This is the first time I have dealt with this situation, and I would really appreciate some advice and/or guidance. Thanks for all your great input! : We have a lease coming up for a 2-year extension in December (yeah, I know, but when we made this lease I didn’t realize I shouldn’t allow for extensions! LOL.) What I want to know is this: I haven’t heard from the company that negotiated the lease (BlueStarLandServices) or the oil company with whom we have the lease (Marathon). Is there a way I can initiate finding out whether they plan to renew, or if I am free to negotiate a lease with someone else upon its lapse in December?
In a nutshell, what does that mean? It is in reference to the Covel that has been completed for several months now.
Thanks, Hutch.
I have minerals in another county and just got a call from an oil company telling me they are force pooling. He wanted to know what my bonus per acre was on what I leased last March with another company. What does that have to do with forced pooling??
Vicki, basically the judge is issuing a temporary order to allow them to drill, then a date is set to come back and finalize the order after completion. This happens with location exceptions and other orders when exact measurements and other details are not know until they do a well survey.
Karen…don’t know for sure but it seems to me if they don’t contact you by the time the first lease lapses to exercise their option that they would forfeit it. That’s just my thinking. If I were you I might talk to a company other than the one you leased with and just ask them what would happen if I had my minerals leased with the option and the time lapsed. (Like if I leased to Energy Leasing Co. for Newfield I might call Jackfork who leases for Continental and ask them). I wouldn’t say who I was leased to or what the description was. Best Wishes!
Went through the diggings down highway 75 and west a ways on highway 29. I just stayed on the highway so this is all I can tell you.
The one Poteet rig was still up. There were three Kelly wells being drilled and three cranes still on one location (and has been for several days now), There were three what I think Honeycutt well rigs up on the south side of highway 29 and one on the north side of 29 I believe someone said was also a Honeycutt well. There was a chemical truck leaving the McElroy #1 and a work over rig running tubing in the hole (I believe that’s what hubby said. It might have been casing but I think he said tubing. I get those mixed up. There was also a couple of pickups out toward the location of the conjoined twins (McElroy 3 and 4 I believe). Still nothing going on with MeElroy #2 location on section 17. They haven’t even graveled it yet. Look like they had an oil tank that had ran over on the Poteet #1 as there was oil on the side of the tank. Guess it’s making so much oil they are having a hard time keeping up! That’s all I can remember tonight so have a good one!!!
Thanks Linda and Bob. I appreciate the input. The lease is written clearly stating that the lessee must exercise their option by paying to lessor on or before the the expiration of the primary term a sum equal to 100% of the bonus originally paid for this lease. Here’s the thing: the lease allows them to keep working the tract if they have done ANYTHING to begin work on it…even just putting the first piece of equipment on it or when the first work other than surveying and staking is done. How do I know whether that is the case? I have already received an offer from another company at a higher bonus AND higher royalty, but I don’t want to enter into a contract if the current lessor has any claim to continuing the lease. Also, in my early talking to lawyers and owners, someone (I don’t recall who) said that just because a company hasn’t formally exercised their option doesn’t mean that they no longer have claim to the site. Does that make sense at all?
About to sign lease with Calumet Energy, they have ok all additional clause to the lease except they won’t move on the deduction clause which states, Lessor shall bear proportionaly the of cost to make product marketable. Since I have no idea what that amount would be, is this wise to except. Greatfull for any advise on this you guys re so knowledgeable
on these matters.
Linda, I wish that was the case, probably saving it up 'til they have enough to sell.
Vicki, I guess don’t bother going by there.
Karen: What section and township is this in? Unfortunately, Oklahoma rules favor favor the operator and not the mineral owner. Just filing an application for a well, or staking a location or moving equipment in is considered “commencement of operations.” I don’t know what it means if they move equipment in or stake a location prior to receiving a permit.
Give me the section and township and I will see if they have filed anything. Then in december you would want to try and scout the location to see if they have equipment out. I think also at that point (After the initial term) you would want to send a letter saying the primary term is expired, and please provide evidence they have commenced operations or otherwise file a release of lease with the county. What kind of offer have you received form the other company?
Karen: My suggestion is do nothing to draw their attention to it until after the initial term. Does your agreement require them to take action to exercise an option or is it an automatic extension? The lease language decides that question. Can you cite the lease language dealing with the extension? A lot of these companies are so bogged down in paperwork trying to keep up with the boom that they neglect critical little details like that, so not drawing their attention to it till after the deadline to exercise would be the thing to do I think, but someone else chime in. Again it depends in whether it is written as an option or automatic extension.
Virginia,
No, It is definitely not acceptable. I hope you are getting better than 1/5 and a good bonus.