Oil & gas discussion group for those interested in Sumner County, KS. Share your experience regarding lease bonus, royalty rates, drilling activity, and oil & gas news.
Have offer for 32S/3W/36 for $400/acre 3/16ths, 3 yr with 2 yr option. He said new hz drilling. Anyone know of going rates? I tried to get 1/5th, but landman wouldn’t budget. This was will Echo Energy. Is there anyone else drilling in the area?
400 an acre is a lot of money, and 3/16ths is fair. Are you putting any money up for drilling? Its most likely over a million dollars just to get the well online. There are a few other companies around there drilling, but do you want to take the time to search and wait? I just looked on the map with the legal description you gave and it looks to be a wildcat, there is no oil nearby to confirm just what the value would actually be. I would say take the deal.
While your immediate thoughts may be the price paid for the oil/gas lease you may want to consider further down the road. Is this a “paid up lease”? If they don’t drill in 3 years then they are probably speculating and while they have your land leased, with perhaps no intent to drill anytime soon as they have an automatic renewal for another 2 years, the guy next to you has a new well drilled and taking oil/gas from the ground for which they are getting royalty payments. You could be sitting there 5 years down the road with no well. If the company is really serious they will have a test well drilled before 2-3 years.
If they obtain production of oil and gas under the lease you sign now, the lease will govern the terms and conditions for the life of the production and any unitized or pooled area. Considering there are still oil and gas production in Kansas on leases which were signed in the 1920’s you may want to be just as concerned with the terms in the lease that will be binding you and your heirs for generations to come. Virtually all oil and gas leases drafted by the company are highly favorable to the company, and not so friendly to the mineral/royalty owners.
While a 3/16th share may sound good be very cautions, if they plan to deduct transportation costs, marketing costs and such from your share that 3/16 royalty will quickly be diluted by expenses.
Making sure down the road you, the surface owner and the future generations are protected may be important to you. It is always advisable to have a knowledgeable oil/gas mineral/royalty attorney negotiate for you. What you pay an attorney now to protect yourself may be well worth it compared to the pennies and dimes you get for the next 40 years because of a bad lease you signed giving away your rights.
No oil/gas lease is “standard”. Concerns for land and mineral owners should include surface usage and damages, the share cost of production expenses, acres allowed for pooling or unitization, and the number of acres in the leased area, just to name a few. If the lease allows for horizontal drilling there are new issues which have not been dealt with in the traditional vertical wells or in the current law. The KCC is currently reviewing its regulations for horizontal drilling. If they drill under your land on the way to your neighbors land and produce under them are you going to get royalty income?
You can go to the KCC website and see what drilling permits have been approved in your area. Also the Kansas Geological Survey website has details on all oil and gas wells in Kansas and you can see what current wells are doing in that area.
Is there a shut-in clause? Is there a minimum royalty clause? Are they going to use your surface land and use one drilling pad for multiple wells going horizontally under your land to other landowners? Do they have the right to use your wells for disposal purposes?
There are a couple of royalty/mineral owner associations in Kansas. You may want to contact them as they represent solely royalty and mineral owners. The Southwest Kansas Royalty Owners Association (swkroa.com) has been around for 63 years and very knowledgeable on oil/gas leasing issues, particularly in the Hugoton Gas Field in SW Kansas. The Eastern Kansas Royalty Owners Association (ekroa.com) has been around a number of years. EKROA is knowledgeable on the drilling going on in SE Kansas including the coal bed methane drilling. EKROA may be able to give you some idea's as to going rates for your area.
I'd be listening to other mineral owners vs. the guys that are related and tied to the oil and gas folks. They wouldn't be putting the money up to wildcat if they didn't think something was there and if they think something is there then someone else most likely does also. If they are just speculating then they can tie up your rights to lease for 5 yr. In that time someone else with more capital may have been willing to poke a hole in 6 months.
I'd do more research.
I signed up with concho land llc. they are getting leases for source energy.They plan to start drilling in december 2011. Some where in Sumner county. I don't know much about either company but they wrote me a check on the spot and the contract seemed fair. Anybody else sign with them?
Our rights are actually in Kay County, OK, but since there's no group for Kay County I thought I'd check on the next closest place in hope that someone knows what's happening across the state line. We just got a lease offer for $200 per acre from United Land LLC. How does that stack up with the current market in the area?
FYI: I do not recommend talking with Paramount Field Services out of Texas. They are an agent for a larger O & G company, in Oklahoma. These people are either new, incompetent or both.
Does anyone know what has transpired with the Wiley well west of Caldwell.
T35R3WSec5 drilled by Vitruvian. Kansas Oil & Gas now has it classified as a producer, but no volumes are noted. If you have any info, I would love to share it.
Has anyone entertained the thought of selling royalty rights either full or partial. If so, I would like to share your results or offers you may have received. I have received offers but am unsure if they are fair. You may e-mail me direct if you prefer. [email protected]
How do you generate disscussion on these boards. Everyone seems very tight lipped on this board. Kindy defeats the reason to have a board.
Gerald,
Depends. Selling a portion of your minerals and royalty's can make sense sometimes. Nobody really knows how the well's Sumner are doing at this point. Its hard to say what someone should pay minerals. Depends on location and risk. Sometimes it is worth taking a bird in hand. Not sure where your land is located. Its seems like there are sweet spots in the formation and I don't know where those sweet spots are.
TC
T.C., thanks for your comments. Its true, everyone needs to evaluate their immeadiate needs when considering the value of their mineral interests. I was just curious if any transactions had taken place and the approximate value thereon. You know unless the mineral owners converse with each other they may never know the real high or low market price in the area. The buyers certainly wil not disclose it. Just look at the variances that have take place in the last twelve months in lease fees in Sumner Co. I know some who have signed for less than $50, and others who have signed for more than $700.00.
Jerry
I see the value in holding and sometimes selling a small portion. If I got $200 for my lease and a company wanted to pay we 4 times that for a small portion of my minerals, I would consider hedging my risk. However, once the bonus prices get to high its hard for mineral buyers to spend 4 times that amount on risky non-producing minerals. Its can be risky to invest in non-producing minerals with no info on how things are doing. If the area becomes more proven then value of the minerals will steadly rise. On the flip side, if certain area's do not do well then the value of the minerals will decrease. Its really a case by case, location by location deal.
TC
Just got an offer from Chesapeake oil. $600.00 PA bonus 3/16 royalties for 3yrs with 2yrs option. I have mine leased so won't be able to take them up on it. Has anybody heard of any drilling in sumner county.
Tom, You mention payment by check; what type of check? Do you use Cashiers check or company checks? It appears you are suggesting that you provide a check at the time of delivery of a signed lease, correct? Would you be willing to accept signed leases after the check has been received and cleared in a MO bank account?
Also, what is the name of the firm you are employed with and are your representing a producer or investor?
Wilson
Mr. Bay, the escrow in the bank sounds eminently fair. Mr Bay, could you expand a bit, in general, I don't want any trade secrets, on the tax benefits of your lease to the lessor?
Tom
I have two quarters just west of Wellington I am interested in leasing T 31S R 2w Sec 23 and 24 my e-mail address is [email protected]
Our family inherited mineral interest in T31-R3W-S20. Does anyone know if there is activity in that area? Thank you.
Tom, do you know if there is drilling in the area or companies looking to lease?