My siblings and I own mineral rights in McClain County, Sections 20-7N-2W and 29-7N-2W. We are receiving offers to buy our rights and have no idea what offers are reasonable. Some of the lower offers have been for $4,500 per mineral acre, but a couple have thousands higher. Any thoughts on whether we should consider selling and what price is reasonable would be greatly appreciated. Also how to find out if company offering is reputable .
We’ve always been told to never sell your mineral rights!
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The reason that you are getting offers is that there are two wells permitted for Sec 17/20/29. With the potential for two or so more. Most offers come before the bit. The permits were granted and the wells have been spud. If it were me, I would not sell. The buyers want the royalties from those two wells and any future wells. The sections just catty corner to the SE have five horizontals, so they see the potential. Your question to answer is would you rather have the royalties from the coming wells.
You should have received all of the OCC documentation on those wells. If you have not, then come back and I will give you the address of the attorney you need to contact to get onto the mailing list. Do you and your siblings all have your names and addresses filed with the McClain county courthouse?
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I just inherited mineral rights in McClain and Garvin counties. I have begun receiving royalty checks. However, I just got a letter from a landman about drilling a new well. They’ve offered me 4 options to choose from:
- Option to participate in drilling and completing the proposed well
- Acquiring my interest for $1,000/net acre for 3 years, and retaining a 1/8th royalty or delivering an avg net revenue interest of 87.5% 3.$600 per net acre for 3 years, retaining a 3/16th royalty or delivering an avg net revenue interest of 81.25%
- $425 net acre for 3 years, retaining a 1/5 royalty or delivering an average net revenue interest of 80%
Do I need to hire an oil and gas attorney? What is the best option here?
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This is a “courtesy” letter which you can choose to ignore, but it does have useful information. It is coming from the operator. You may get better offers from third parties.
FIrst, you need to identify which of your tracts is goes with. You need to list which tracts go with the royalty checks. You may or may not be able to lease this tract. Sometimes, batches go out with not much title work being done first. The previous leases may control this tract or it might be open to lease.
- Option to participate is not for the novice unless you have deep pockets and good attorneys and accountants.
- Depending upon the location of the offer, this may be the lowest royalty offers. I always ask for 1/5th and 1/4th to see what they say.
(That is option 3.) Most experienced folks would like the 1/5th.
You may eventually need an attorney, but first ask who the operator will be and when they plan to drill. Ask when the pooling date will be. That gives you a time line for getting your decision made as you can either lease or get pooled. Both have pros and cons. Come back to the forum and ask if others are leasing in your area. The draft lease from the operator is in their favor and will need quite a few edits. A third party offer is sometimes more friendly and can get better lease clauses. The actual clauses in the lease are more important than the bonus as they can hold your family for decades.
Thank you for the very detailed and helpful response! I spoke to the landman, and he does not think the letter was intended for me. In it he references: “The well will be located in the center of the S/2 of Section 4-6N-4W. The completed lateral length will be approximately 11,000’ with estimated 32.5% allocated to 4-6N-W, 48% allocated in Section 33-7N-4W and 19.5% allocated to Section 28-7N-4W.”
My mineral rights in McClain County are: NE/4 NE4 and SW/4 NE/4 and W2 SE/4 NE/4 and S/2 NW/4 NE/4 and SE/4 SE4 NE/4; SE/4 N4/4 NW/4 of section 7-6N-4W.
I have no idea how to read this and if my property is in the drilling area.
Thank you for your help!
S-T-R Legal Land Descriptions in OK_Kletke-1.pdf (59.7 KB)
This is a very good article on how to understand your mineral descriptions in OK. I find it helpful to read them from right to left.
Here is a slide from a presentation that I gave at the OK NARO convention last month. It expands on one of Kletke’s diagrams. Look at the middle township diagram. Your section is 7 which is over on the west side. The letter is for section 4 which is two sections away, so not in the drilling area.
How far do you think we are from actual production Martha ? I know these things take time, and I fell asleep during the process ! I am in the same camp, I would much rather collect royalties and keep the mineral rights. This has real potential I think.
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East side has a bunch of gas it seems. But gas is cheap and they want to find oil.
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Joe,
Which section, township and range are you asking about regarding timing?
I’m sorry . I am in 29 7N 2W . The long wells through 17, 20 and 29. A month or 2 to drill , and they will pump 6 months before we get paid maybe ? It’s pretty exciting over there.
More like four to six months to drill and complete. Drilling is rather quick, but fracking those two wells will take much longer. You might expect a Division Order in about five months after completion. Then payment a month after that.
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Unless a person needs the money , I don’t see doing anything but waiting for the checks. Any other gimmicks you do, will likely cost you money.
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Lime Rock Millan MU 17-20-29 3 HEX was spud 3/8/24
Lime Rock Millan MU 17-20-29 4 HEX was spud 3/7/24. Might have just set surface casing on them both. Woodford wells.
Frac Focus does not list either well with a completed frac-YET. Time will tell…
Lime Rock has active Woodford horizontal wells in contiguous sections just to the east and south of you, so encouraging for the Woodford potential in 17-20-29.
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I think we had a decent straight hole well or two in 5N 1E 29 and 30 I will go back and look. They put out really good gas but the pipe collapsed on the better well after a year or two. The wells were named Phillips and Sandra.
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Will be interesting to see what production is soon. Those wells would have been expensive to drill ! Do they drill any longer horizontals than 3 miles ? I was not really aware they would even do 3. I have seen lots of 2’s.
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Three mile horizontal wells are quite doable. Some areas in Teas are testing four mile laterals. I think I saw a permit for one in OK recently.
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Any chance they will go thru Sect. 18 since activity is in 17?
Just to confirm, you are not sure if there will be any vertical drilling in 18, but sounds like anything is possible. ??
What do you mean “nothing”? No oil ?