Just got a well proposal letter from R. D. Williams & Company regarding Vogel Exploration drilling a multi-unit horizontal test well in the SE/4 of Section 23-13N-19W, Custer County, OK. Not sure how to proceed to respond to their letter. There are several options including paying a proportionate share of the actual well costs.
Welcome to the forum.
You do not have to respond to that letter. It indicates that a well is pending. Participating is not for the novice mineral owner. You may lease with that company or another company or wait for forced pooling. If you are new to ownership, the Mineral Help tab above is a good place to start your journey of learning. Also here is a list of very valuable websites. Get familiar with the Oklahoma Corporation Commission website. They have a nice publication for mineral owners. Suggest that you download it.
Most initial leases offered by an operator are not in the mineral owner’s favor, so it is wise to get an oil and gas attorney to look at the lease and made edits more to your favor. Never sign something you do not understand. Do not hand over a signed lease without getting payment. Not a 60-90 day draft which many companies will try.
"Pending OCC cases at the following link: Case Processing Online Electronic Case Filing
Actual cases if you have the case numbers: OAP
Docket proceedings: http://www.occeweb.com/ap/docket_results.html
Well activity: Test
Production: Gross Production Deeds, probates, etc. -www.okcountyrecords.com "
Thank you for your response. Just to complete the picture, the letter offered the following options: Option 1: Participate with the interest in the drilling of the proposed well by paying your proportionate share of actual well costs as set forth on the attached AFE.
Option 2: Lease/Assign the interest in the captioned section to Vogel for a bonus consideration of $300.00 per acre, reserving a 1/8th royalty, delivering an 87.50% NRI, and a three year primary term.
Option 3: Same as Option 2 except $200.00 per acre and 3/16th royalty.
Option 4: Same as Option 2 except $50.00 per acre and 1/5th royalty.
What would be the advantage of not responding to the letter and waiting for forced pooling?
Thanks for the list of valuable websites. I’ll certainly make us of those resources.
You can go ahead and answer and start negotiations with Williams. They are an agent for Vogel. You may get offers from other leasing agents, so I usually hold back for a few weeks and see what happens. The nearest pooling was in section 28 which had $150 3/16ths and $100 1/5th, so you might be able to push the 1/5th option a bit. Chaco Energy was the operator on that one.
You can go ahead and get the draft lease and then run it by a good oil and gas attorney to make edits or you can wait for force pooling which may or may not happen. But those letters usually indicate that OCC cases are about to begin. Many of us prefer force pooling since it is only for six months-one year or so and is only for a particular reservoir. Bonus/royalty pairs are supposed to be comparable for the area.
Thank you very much!
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