Thomas County, KS oil & gas discussion group. Share your experience regarding lease bonus, royalty rates, drilling activity, and oil & gas news.
I have started this group in hopes of sharing information. I am a retired Landman. I spent 30 years working for large oil companies (ARCO, Vastar) and others conducting leasing and other land related activities. My brothers and I inherited a small amount of acreage in Thomas Co. and have been approached for an oil and gas lease. Other relatives own acreage in Rawlins Co. I was offered $35/ac bonus, 1/8 royalty, 3 yr term with an option to extend for an additional 2 yrs on a lease form that was completely unacceptable. I refused the offer. I am curious if others have been approached as well and the terms offered. I am willing to share my knowledge and experience if others are as well.
I am told from industry contacts that the leasing activity is in relation to the Niobrara activity in NW Colorado and S.E Wyoming. Any leasing activity others are willing to share would be appreciated and reciprocated.
Thanks in advance
Ed Stengel, CPL
Thomas,
I lived up in Colorado working in the oil and gas industry. I didn't think the Niobrara extended into Kansas but I did find that there is leasing activity in Kiowa County, Colorado. They may be going after something different than the Niobrara. The play could go from Colorado into Kansas Wallace, Sherman, Thomas.
There is also a thought that the Mississippi Play goes as far up as Thomas County.
I am curious to know if you have heard of anything else.
TC
At least one company buying leases in Thomas Co. is Sandridge Energy. They are the company that has made offers to lease my property. Here are a couple of articles on Sandridge and their activity in the Mississippian play in Kansas.
http://www.kansas.com/2011/12/27/2153924/sandridge-energy-trades-land-for.html
Ed,
Thanks for the info and the articles, very helpful.
TC
Ed / TC
Thanks for allowing me to join you group. I am a land owner in Thomas & Sheridan Counties. I was contacted this week by a representative for Richy Exploration seeking to lease a quarter of mine in SD CO. The quarter is west of Selden just north of US 83. There have been previous leases and they conducted sonic testing I believe 3 yrs ago (I was not the owner then). He offered me $15/A for 3 yrs with 1/8th royalty. I did not commit. That's when I went searching and located Mineral Rights Forum and your group. I read the article from the link on sandridge energy and was shocked. Would the area around Selden possibly be part of the Mississippian play? I truly appreciate any thoughts or info you might wish to share.
Dale,
I dont know if your acreage may be prospective for the Mississippian play or not, I am not sure Thomas Co. is either. The play could be the Niobrara, although most of that activity has been farther west in NE Colo, SE Wyo and SW Neb.
One thing I picked up from the Mississippian articles I found is that often the Mississippian has been productive in vertical wells for some time, although never very high production rates. I believe the Mississippian in this part of KS is between 4000-6000'.
I found this site where you can enter the location of wells near your property and find out some history on that well. If you find production in wells near your property in that 4000-6000' range, it could be that your acreage is more prospective than others due to nearby production history. After all, the best place to find oil and gas is where it has already been found.
Dale,
Where is your land in Colorado? I'm with you on the Niobrara...it is NE CO. I believe the Mississippian has an extension that could go clear up to Thomas. Where is Seldon?
TC
TC, I am USAF living in Colorado but my land is in Thomas and Sheridan Counties in KS. Selden is in the NW corner of Sheridan County. I know there is much interest and exploration occurring but didn't know what was a fair and reasonable mineral lease these days in our area of the state. I have a friend who owns land in Cheyenne County and he was telling me they are offering $60/A for a lease.
Ed
I used the website you provided and found there are two producing wells, one 2 mi straight north and the other 3 mi north. There is an old oil field approx 5 mi southeast of my property. I know when I was a kid(late 60s), they drilled on this quarter which my grandfather owned at the time and it was a dry hole. Don't know if technology has changed so that they might now find something that wasn't possible then? Again, just looking to learn what I should expect in terms of a fair lease. In Nov you stated you turned down a $35/A lease offer, has anyone returned with another offer?
Thanks guys for the sharing of thoughts and info.
Dale
Dale,
Since the first offer the same brokerage company has approached me again and increased the bonus to $45/ac. but they wanted to increase the lease term to 5yr lease w/ a two-year option to renew at the same terms.
The most important term in the lease is the royalty, which I was told was not negotiable. While this may be true today, it may not be later.
The lease form they proposed was also completely unacceptable. I declined the offer. If you think about it, an option for the company to renew the lease at the same terms gains the landowner nothing. If during the term of the lease the area has gotten more prospective, the company will gladly renew the lease at below market rates. Thereby the landowner left money on the table. Conversely if the area has been condemned, the company wont renew the lease. In this case, the landowner hasn’t lost anything. It's a no win situation for the landowner to grant the option to renew unless increased terms can be negotiated upfront. But even then you don’t know what the going rate will be at the end of the lease term. Additionally, the lease form gave the company carte blanche on surface damages, water use, no Pugh clause and very liberal pooling language.
Ed
Dale/Ed,
Is the sandridge the only operator leasing in Sheridan and Thomas? Dale were you talking about Cheyenne County Colorado nin the ? Dale in that article it talked about new acrage that Sandridge is trying to aquire, do you think they are talking about Logan, Sheridan, Thomas County?
TC
Sandridge made the only offer I have received. I'm not aware of any other operators leasing in Thomas Co.
My property they are looking to lease is in Sheridan County KS. The company is Ritchie...they have other ground leased in this area but I have not found anyone who will tell me what their lease was worth. I do know they are looking at a 4sq mi block which tells me they have something fairly specific targeted. They have not yet contacted me a second time but I'm sure they will. Would like to bargan for more than $15/A but really interested in getting a commitment to more than 12.5% royalty. Any thoughts on what one could ask for regarding the royalty? Would be nice to have Sandridge competing with Ritchie but have not had any contact with them.
The person with Manhattan Energy who contacted me was Jordan Kramer. His phone is 682 201-0894. (the broker working for Sandridge) You may want to contact him to see if they are interested.
Thanks Ed. What are your thoughts on how the area Thomas or Sheridan will do if drilled? Are they just trying to get land under lease and hope it turns out good?
TC
TC,
I dont know the relative prospectivity of the Thomas Co area vs others, but no company simply leases with hope that it turns out well. They have reasons for spending the money to lease the property and drill wells.
I have knowledge from last week of Apache offering $175/ac and a 1/6 royalty in Thomas Co. to one of my relatives. I will post more as I get additional details
Hello TH O&G Mbrs,
I am again approached by Ritchie Exploration for a 3yr lease at $25/A w/2yr extension option for $25 and 1/8 royalty share. I know leases were going much higher several years ago but am not aware of what they are worth today. This property had a well drilled in 1970 that was non-producing in the Lansing-Kansas City formation. Has there been new discoveries in this formation recently? Any word on what is a fair lease these days would be appreciated.
Dale,
I have not received any new lease offers since the last one I turned down. This is not to be unexpected because the price of gas has been low and, at least until the last several months, oil prices have been high. This part of the trend is gas prone, so with falling oil prices, rig rates should rapidly decrease, making gas wells more economic.
Good Luck to you
Ed