The Newbie and Newy 1-24 H

hello all

I know nothing about oil leases, mineral rights, and oil drilling in general, and am hoping for some direction and referrals .

Last week's mail contained a registered letter containing copies of court filings sent by an attorney for Continental Resources, and various pitches from land men to lease mineral rights my family owns where they plan to drill. That is:

Section 24 Township 3 North Range 5 Grady County.

The first part of the address, I thought this is South Africa.

Last year NorthWest wanted leases on Section 33 Township 4 North, Range 5 West Grady County. NorthWest aka Newfield exploration aka Miller Properties, who's on first out there?

What happened to the sucker meant to go on section 33. Did Continental buy out NorthWest? If I signed a lease on section 33 to Northwest, maybe Continental owns it now?

How far is Section 33 Township 4 N Range 5 from section 24 Township 3, as the crow flies?

So on Oct 12 Continental announced the discovery of potentially huge oil fields in Grady County. I guess my grandfather discovered it before Continental because he bought the mineral rights there. Are the proverbial family oil wells we only joked about actually going to gush with black gold? If so, don't i want to be there?

(I would like to know that history, what caused Poppy and his siblings all to buy some mineral rights. Rumors that they were going to drill way back then?)

My great grandmother and great-aunts are listed as mineral rights owners on the court documents. Their shares are unclaimed. I can prove their relation, but I have no idea how to go about making a claim to these unclaimed portions of my relatives for my sisters, cousins, and myself. How to find out who owns what now? Lawyer or title company?

How many wells get drilled per acre, or per section? How much room does a well take up? Does a company like Continental drill in a grid, section by section? If one well hits, another one gets drilled very close? What is the point of testing the Woodford formation?

How can one guesstimate the potential of future royalties? How long does a well keep producing oil? Is it new technology that makes this oil fields worth drilling now?

What about this first option on all these proposed leases, the right to participate to my full interest? They be talking like wildcatting?

What's the risk/reward on that kind of participation?

Environmental concerns: the drilling permit I saw online for an well nearby mentions a sensitive hydrological zone, and the aquifer..... What are the water issues involved in this drilling?

Lots of questions here. Answers to any appreciated.

You interest are in very active townships. Did your G.G.mother & G aunt have wills and who were their heirs? Why were Court filings sent to you if the interest was not in your name. Whose name would they be in ? How many acres in each tracts ? How many others ,cousins, sisters ,and yourself are there ? 33-4n-5w had a well started in Aug. should be do by now. 24-3n-5w is being Pooled the hearing is set for Nov. 26. which means they are getting ready to drill it.

Chipper, I'm sure you will be a welcome addition to the forum, sounds like you have a great sense of humor.

You have asked way more than can be answered in one sitting , especially with having to cook the bird etc. I don't suppose you guys celebrate Thanksgiving up in the frozen tundra?

Most of us are here for the same reason; we inherited minerals from our ancestors. Your Poppy's vision was common among Okies of that era. Oklahoma has been an oil and gas state for generations. Today new technology has revived the oilfields that were once thought to be nearing extinction. Drillers are now producing from formations once thought unreachable. We are very fortunate to be the beneficiaries of this new found wealth.

I and I'm sure others will try to answer your other questions after we recover from the big feast.

HAPPY THANKSGIVING

Thanks Ron. Sorry for the confusion. I have an interest in my name, as do my two sisters and cousins. In the court filings exhibit is a list of a hundred names, including my great-grandmother, great aunts and uncles. I don't have their wills nor do I know how many acres or even how many tracts anyone owns. For example, my mother is listed but as far as I know her share was divided up between the three girls upon her death twenty years ago, so maybe her name and others are redundant.

In answer to your question we are 3 sisters and 3 first cousins who are heirs in contact. My great grandmother had more heirs than us but they are unknown to us. I am sure my aunt and great grandmother would have had wills, but where to get them?

How big is a township and are there people there? What determines why one township is active and not another?

I am surprised to hear about the drilling because I have an order dismissing cause on Feb 8, 2012 that says Newfield exploration does not intend to drill the well. So who did the drilling and how do I find out?

Thank you.

Chipper,

I would suggest you contact Gary L. Hutchinson. Gary is in the Minerals Management business. Since you are not familiar with the oil/gas business these producers(companies) like to deal with and take advantage of mineral and royalty owners that are not familiar with the business. Believe me when I say there are some sleasy oil/gas operators out there. I'm not saying all operators are that way. But beware.

Gary's phone # is 303)2794113

[email protected]

Clint Liles

Chipper,

Continental resources is drilling the Croom 1-33H. The well was SPUD (started) on 8-5-12. If it is not already complete it should be very close. Newfield and Continental are serious competitors and frequently have disputes over drilling rights. Looks like Continental won this one.

Here's an article with illustrations that explains the Township system. Some are populated some are not.

http://www.usgennet.org/usa/ok/county/muskogee/cemeteries/trro.html

Geological research including seismic surveys determine drilling locations. Usually the first well in a "play" is considered a test or exploration well. Once an area has had some success it has been "de-risked"

Thanks MIchael,

We have another tract which Continental is having the court date tomorrow on forced pooling. Since it appears we have to sign nothing with them because the State will give us the same price (?) my question is this:

The first option on all the leases is the right to participate. I am interested in this. How do I find out about this before it's too late to participate, if that is what I want. Apparently most owners don't do this. Besides the risk and the outlay of capital, why don't people do it, raise capital from friends hoping to strike it rich.....

Chipper,

Once the Pooling Order is is approved by the OCC you will be sent a copy of the final order which gives you your options and about 20 days to respond. Don't let them choose for you as they will give you the 1/8 option which is a higher signing bonus but lower royalty, saves them money over the long haul. The average person probably takes the middle of the road 3/16. Some people go with the working interest but others are more risk adverse. Really depends on how deep your pockets are and worst case scenario how much you can afford to lose. I know someone who took the working interest and they are in the completion phase now after experiencing some unexpected delays resulting in a cash call to WI owners. He feels he will come out o.k. but has had to revise how long it will take to make his money back. Modern technology means fewer dry holes but there can still be the occasional surprise. If you want to give me the section, township and range I can let you know how the hearing comes out probably a couple of weeks before you get anything in the mail. I assume by tomorrow you meant monday.

To participate in the well, called a Working Interest (WI) , you will have to pay about $15,000 an acre for these wells up front within 25 days of the Pooling Order in most cases, unless you can get an agreement for payment with notice of spud. You can take a WI with any part of your interest and elect another option with the rest . You should be ready for possible overruns of at least 20% in your planing . Most poolings were for 6 months but the Co.s have been asking for and getting a year. So if they took the year to start then 4 to 6 months to drill and start production , if there is any to start , then they have up to 6 months from date of first production to start paying. The first check being for several months then monthly after that. That is a long time for friends to wait. If they get a well you would get a full 8/8s of the interest you took a W.I. in. You must take W.I. in the first well to take a W.I. in any other well drilled later on the tract. There are also your share of monthly lease operating expenses, LOE, that you must pay or you can have deducted from your check. In U.S. W.I. expense and LOE are tax deductible .