Mike,
Do you own the full interest in Section 1?
To Mike East
I would go to the Tx RRC GIS mapping site and see what wells are around your area. Then you can dig into the nearby wells to see where they are producing.
Where is your block / tract? I can check DrillingInfo (a subscription service) to get a quick look on what is around your area as to wells if you want
There is a partial release from Cimarex to Michael East, et al, recorded in April 2015 which states that Cimarex reserves from surface down to 100 feet below base of Bone Spring Formation. Volume 1037, Page 520. Base of Bone Spring would be around 10,500 feet. You are or were being paid royalties by Cimarex for a Bone Spring horizontal well. The 5,100 feet you cite would be a formation in Delaware Mountain group which does not have any horizontal wells.
Rock Man.
Located Section 1, Block 1, W & NWRR CO. Survey
Ward County, Texas
Thank you
Mike
There are various overlapping field rules in Ward County which causes a lot of confusion. Names are not totally descriptive. NOTE: There is no "s" on Bone Spring.
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Sandbar (Bone Spring) is all of Bone Spring formation - often called 1st, 2nd & 3rd. See RRC Docket 08-0295961, Examiner’s report for depths. Bone Spring is stratigraphic equivalent of correlative interval of 8,007 to 11,067 feet as seen on log of Andarko - Sandbar 54-2-39 Lease, API 42-301-31431. Note: Exact depth is generally shallower to the south of Ward County as underground geology is not consistent.
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Two Georges (Bone Spring) field is all of Bone Spring formation plus Wolfcamp A (upper Wolfcamp). Correlative interval is 8,979-11,600 feet as seen on log of University 19-18 Well #1, API 42-301-31204. RRC Docket 08-0251527.
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Phantom (Wolfcamp) field is 3rd Bone Spring plus all of Wolfcamp formation. Correlative interval is 9,515 - 12,447 feet as seen on log of Petrohawk-Oxy Fee 24 Lease well #1, API 42-389-32637. RRC Docket 08-0291540, Examiner’s Report.
Mike, in your lease, describe as “depths below 100 feet below the base of the Bone Spring formation” to conform to the Cimarex release.
1 Like
Tennis,
Thank you so much for the material, it is what I needed for education.
Thank you,
Mike
Tennis,
Thank you for taking the time to look up the release by Cimarex, I never knew the base depth of the Bone Springs formation base at 10500.
I now understand, curious about the depth of the Wolfcamp formations from 10500 and other formations below. I have looked but not found the info.
Thank you for the assistance.
Mike
Clint,
Thank you for digging up the information on the wells, much appreciated .
Mike
Mike,
NO, there are 3 family owners
This is a question for “TennisDaze” re: his post of 22 May 2017. There are both Phantom (Wolfcamp) and Phantom (Bone Spring) pools. Am I to understand that the former includes all of the Wolfcamp formation and the 3rd Bone Spring sand and the latter only the 1st & 2nd Bone Spring sands? If so, would this apply only to Ward County, or would it apply to Loving County, as well?
Kindest regards,
Ken
Does anyone know if operators who pay out royalties are willing/able to express the payout as miscellaneous1099 income instead of royalty income so that the recipient of the funds can set up a SEPIRA retirement vehicle?
This response is for “Lamont” re: misc. 1099 income vs. royalty income. I think the best bet would be to call each individual operator you receive or expect to receive royalty income from and ask them that question. It might also be wise to run it by your accountant to find out whether it is consistent with federal tax law and/or acceptable accounting practices for an operator to even do so.
Good luck! Ken
A question for Ward County regarding companies and royalties.
I would like feed back on the following companies, BLACK OAK LAND MANAGEMENT AND PBEX, LLC OUT OF OKA. We have been approached by both to lease our M. R. at good dollars pmna, 3 years, 25% Royalty and no options. Who are their primary drilling contractors and/or oil companies they do business with. Are they flippers or active production companies. All info helpful. Black Oak dropped out at $10,000 pnma today. In addition over the past 6 months we have been contacted by 18 or more companies interested in our land. Most are fishing for a sucker to grab the leases at low ball rates. I told one company “Show me the Money” to cut to the chase as we had several high offers, never got a response. Several companies opted out of the lease process at $10,000 per nma. I could provide a list of the contact companies if it will help other members in their negotiations.
We are proceeding slowly;
What offers have you heard of in Section 1 Block 1 area.
Regards
Mike
If you are being offered anything close to 10k an acre, I would take the in run. I was part of a group leasing in Ward County last year. We paid $2k - $3k an acre and everyone was happy. Don’t be surprised if this all comes to an end even if it doesn’t seem likely. History repeats itself.
John, thank you and how well I know.
Mike, I have to agree with John Goode re: the the offer of $10,000.00 per net mineral acre for a 25%, 3 year lease. That is a lot of bonus money, even with really good wells near to or offsetting you. I was in a situation in Loving County earlier this year that sounds pretty similar to yours, negotiated $6,500.00 per net mineral acre and thought I did really well!
Best of luck to you! Ken
Mike, I am familiar with PBEX LLC and am acquainted with the Chairman and the CEO (I believe they are brothers), although I’ve never do e business with them. Last I knew they were out of Midland. Both have multiple companies and business interest. My recollection is that, at the time I met them several years ago, they were mainly mineral interest buyers, although I’m sure they owned working interests as well. Unless things have changes, I’d be surprised if they did any drilling of the kind of horizontal wells we’re talking about on your acreage. As far as I know, they are reputable folks. I think one of them had even been mayor of Midland at one time. Hope this helps.
Best, Ken
I agree with all those on if it is a lease for $10K and 25% royalty then sign immediately. BUT BE CAREFUL, make sure you are not signing a document that in some legalese the provision says anything about a 25% lease and then anything that would indicate you selling your interest at $10K per NMA. Make it clear the bonus is $10K per NMA in the lease at 25%. That there is no conveyance of rights.
Just be careful. Read it carefully and get a 2nd opinion from an attorney, landman, accountant, oilman, etc., and make sure what you would be leasing and not deeding any rights.
When you say $10,000per mineral acre for a 25%, 3 year year lease, explain.
This is in response to Richard Kyle Miller’s question posted yesterday.
A 25%, 3 year lease means: 1) the lessor (usually the mineral owner) is entitled to 1/4 of the value of all oil, gas and other minerals which may be produced and sold from under the surface of the land covered by the lease for as long as it is produced by the operator of the lease and, 2) 3 years refers to the “primary term” of the lease, i.e., the time frame from the effective date of the lease during which the lessee must drill a well before the lease expires.
$10,000.00 per net mineral acre is the “bonus money”, i.e., the funds paid up front to the lessor/mineral owner to sign and enter into the lease. For instance, if you own 100% of the minerals under a 100 acre lease, you own 100 net mineral acres and are paid 100 x $10,000.00 = $1,000,000.00. If you and one other person each own 1/2 of the minerals under a 100 acre lease, then you own 50 net mineral acres and are paid 50 x $10,000.00 = $500,000.00.
Hope this was not too rudimentary an explanation. Good luck!