My employer (a 501c3 non-profit) was contacted regarding an oil lease and we didn’t know we had any mineral rights, but apparently we were given some in a will some years ago. So I am just starting to learn about this stuff, and I was wondering if anyone could help me estimate a value on the mineral rights attributable to 40 acres of land in “the south one fourth of Section 132, in Block 34”. We need to have a fair market value for these mineral rights so that we can record them on our books as an asset.
The deed also says that “It is the intention of this conveyence to convey 10 Mineral acres.” Can someone tell me what that means? And how it figures into valuing these mineral rights?
One more thing. The land man who contacted us offered a lease of $1,000/acre, and 25% royalties. From what I have been reading on this forum, that seems to be on the low end for Ward County property, but any guidance here would be helpful as well.
Anyone with a small amount of acreage (say less than a 100 acres) dealt with an oil company? With the advent of directional drilling, crossing property lines is not uncommon and it seems to me that could hamper lease agreement negotiations. It seems to me that the negotiating power varies depending on which company(ies) own the leases around my property. Any thoughts anyone?
Probably a little low on the bonus. 10 NMA means the charity has a 25% interest in 40 acres. Leverage depends on where you are located and what percentage of the minerals they have leased up, but generally even 10 acres in ward justifies having someone look at the lease. The bonus is usually a small amount compared to royalties you will receive on even an average well in this area.
Jim- You are correct, these are factors, but there are spacing requirements, so a horizontal borehole cannot come within x feet of your property line (depending on the rules in that field) without the operator getting an exception from the RRC. In short, a small tract can have good leverage if it is located in the right place, i.e. it interferes with the planned drill paths if it does not get leased. Do not sign the lease the operators put in front of you!!!
We got a offer for a lease for section 38 Block 33, H&TC RR Co. Survey in Ward County from Southwest Royalties. We have a well on this section that is at a depth of 6483 ft, In the original lease agreement it states that the lease will expire at depths below 6583 ft. Southwest Royalties is offering 250.00 NMA with a 1/5 royalty on a three year paid up lease. Is this a good deal or not. The interest is 1/3 of a 10acre interest in all of water tracts 5 and 12.Thanks for any info.
A source of information I have used in Ward County is the District Water Manager. He is in the field daily and knows who and what is happening in his area. I have been able to find out oil companies who are leasing, drilling, the cost of ROW per rod, price of a barrel of water from a drilled well, dollars paid for a bonus lease in the area, dollars paid by the oil companies for Caliche per yard, and other info.
I have paid him for his services by cashiers check, sent to his personal mail box so as not to create a conflict of interest. Much cheaper than a
My family and I own 240 surface/mineral acres in Ward County in the JW Hollingsworth Survey. (Ward, South Field) We are interested in leasing the property for new wells. We have received interest in leasing the property for 10k annually for injection wells; however, since we are also interested in leasing the property for oil and gas primarily, we would like to know if it is possible/necessary to combine them all in one lease, or may they be leased separately, allowing us to accept this lease, and also keeping our options open for future oil/gas leases as interest arises.
If you are or have contacts for a landman in this area, please respond with your comments or email me.
i’m new to the Ward County forum. A couple of questions and comments.
i have interest in four wells in H&TC Blk34 Sec.191 A269. The wells have been great, but lately the extra charges attached to processing, transportation etc. have been eating my lunch, particularly on the gas portion. If you make a lease, be sure you try to get that eliminated. Also, the spot WTI price posted on the exchange has been higher than what Anadarko has been paying. it’s been as much as $10. lower per barrel. They gave me some song and dance that i didn’t understand. Have others had these problems?
We have wells with Anadarko in H&TC Blk.34 Sec.170. Yes, unless you have specific language in your lease to the contrary the operator has the right to add those extra charges. We had to learn that the hard way a few years back.
Anadarko’s pricing has been consistently running $3 to $4 under the WTI spot price posted each month. They did have a larger gap back in Jan/Feb this year for as much as $10. However, we track all the other oil companies in our Permian Basin wells and they seem to be aligned with that same $$ spread. EOG has been the one bright spot as they have been the best so far.
Mr. Terry, if there is no gotcha in the deal, from your perspective I would want to be buying the small amounts of surface to maximize profit. There has to be a catch somewhere beyond the traffic and dust. Frankly I wouldn’t want a SWD well on my surface or near it for twice the purchase price of the surface. Why on earth would you not buy what you needed and keep all the upside yourself? It just does not make sense.
Mr. Kennedy, I’m not at all looking for a deal of a lifetime. Just looking for a joint partnership beneficial to all parties involved. People have called to inquire and we are in the process of completing a few deals. This is a great time for all individuals to capitalize on this oil boom and not just the big oil companies. Call me and we can talk.
Mr. Terry, I understand also, you are undercapitalized. You may well fall into the category of what I call the no money down, OPM people, which most people object to, but I feel is accurate. The difference would be if by your own efforts you created value added for the surface owner…and yourself. If on the other hand you just want commitments from the surface owner with no skin of your own in the game, you would just be the OPM, no money down flipper. In which case I would not give you a commitment or option, but I would tell you if you put it together I will listen.
I personally in my crude way would be going around saying , hey you, I have contacts in the oil industry and I think I may be able to get you a SWD well but I get a cut. Pretty simple and everyone knows where each other is coming from. On that basis, if I had surface in the areas you were looking in, we might have something of mutual interest to talk about. The only property I have in TX at the moment is land that my family donated to the school district some time ago and has been returned to us, with a 14,000 square foot brick building on it on 2.2 acres, with a SWD well right across the highway, another family member has 20 something acres adjoining. If there wasn’t literally another SWD across the street, I would have been willing to give you a shot with it, since I think the 2.2 acres and building is going to sell for a pittance, just so we aren’t paying the taxes on it. 5 years ago with the right approach we would have had something to talk about, but you still would have had to sell me on the sweat [mental ] equity you were bringing to the deal. I hope you will think about what I have said and I will wish you good luck.
I get the feeling that Mr. Terry is looking for the deal of a lifetime on 5-10 acres of surface, because nobody has yet taken him up on his offer. If he only needs 5 acres why doesn’t he just spend $15k to $20k and buy some surface? I believe there must be some reason he does not want to buy the surface, possibly environmental issues. Scrub surface is just too cheap. No offence meant, but it does not add up.
Thanks for the well wishes…and I really mean it…but we do have up skins in the game…before this process is ever completed, attorneys, geologists,land surveyors,enigineers,etc. have to be paid…which we pay for upfront…again, just call me…lets talk…I really wish it was as easy as it sounds, but in reality, it’s not…it’s a process that takes time and patience. Again thanks and I really look forward to speaking with you. 512-791-2499. In other counties, depending on activity, there are swd literally down the street and across. Let me research your proposition and see what happens.