I have held out before but I am now starting to get some serious bonus offers for o/g lease. Does anyone know the current going rates and terms for the NW part of Cheyenne Co.?
According to a recent article in "Oklahoma Energy Today " reguarding Cheyenne County:
After digging around, we found some accounts of mineral owners who had been
approached by Chesapeake (and others) as far back as 2011. Initial per acre bonus payments started around
$100-$150/acre and are much higher than that today ($500/acre+).
WELLS FARGO SECURITIES, LLC
Well my offers have jumped from the old meager $10/ac to $175 to $225/ac. I figure if the latest offer is starting at $225 they must be higher than that now.
It is looking like most of the the county has been leased. Any comments on that?
Rob Bailey said:
According to a recent article in "Oklahoma Energy Today " reguarding Cheyenne County:
After digging around, we found some accounts of mineral owners who had been
approached by Chesapeake (and others) as far back as 2011. Initial per acre bonus payments started around
$100-$150/acre and are much higher than that today ($500/acre+).
WELLS FARGO SECURITIES, LLC
De,
There are strong geologic reasons for your observations in addition to the recent reported discovery in 48-15. I expect some good heavy weight operators to be making an appearance in Eastern Cheyenne county as well as south and east. Location and size are most important to the reliable operators. I have direct knowledge of bonuses in good geologically proven areas for large acreage well in excess of the amounts the speculators were offering a couple of years ago. However, the fact remains, that the terms of the lease will make the bonus insignificant when it comes to royalty payments. The next phase of development in the area will be a whole new ball game for the mineral owner. Be prepared to make fair deals that are good for the both parties.
Turns out you were wise to hold out. You apparently knew more than the leasing company. Those that took 5 + 5 year leases just to get some bonus money may be proven to have shot themselves in the foot. If you have a lot of acreage, learn about the potential for each parcel and don't put all your eggs in one lease basket. It isn't going to be that sort of a play this time around.
Gary L Hutchinson
Minerals Mangement
We have minerals south of Wild Horse 8-15-50 area ( total 2,388 nma) and currently are leased for 3+3 with Westphal which I'm sure leased for Chesapeake.
Thank you Gary. I work with minerals / royalty owners in SW Kansas so am familiar with the oil/gas leases and some of the new plays in the area as well as who the players are, at least in this area. I however do not have my "ear to the ground" in Eastern Colo. (Kit Carson Co. and Cheyenne Co.) so do not know what folks are getting there. It also appears the drilling activity is still more to the east of my interests, however I understand from family members of family members they have committed as many available rigs that they can to that area.
And we all know what the wells are hitting on the east side of a county may have little to do with what the wells are hitting on the west side. Just depends ... Has there been any seismic/geological testing in the north and northwest part of the county yet?
Gary L. Hutchinson said:
De,
There are strong geologic reasons for your observations in addition to the recent reported discovery in 48-15. I expect some good heavy weight operators to be making an appearance in Eastern Cheyenne county as well as south and east. Location and size are most important to the reliable operators. I have direct knowledge of bonuses in good geologically proven areas for large acreage well in excess of the amounts the speculators were offering a couple of years ago. However, the fact remains, that the terms of the lease will make the bonus insignificant when it comes to royalty payments. The next phase of development in the area will be a whole new ball game for the mineral owner. Be prepared to make fair deals that are good for the both parties.
Turns out you were wise to hold out. You apparently knew more than the leasing company. Those that took 5 + 5 year leases just to get some bonus money may be proven to have shot themselves in the foot. If you have a lot of acreage, learn about the potential for each parcel and don't put all your eggs in one lease basket. It isn't going to be that sort of a play this time around.
Gary L Hutchinson
Minerals Mangement
Also, is anyone aware if they are leasing as to specific depths or formations verses leasing to all depths?
De, Our leases do not have anything in them pertaining to depths or formations.
You are absolutely right De, It depends a lot on structural traps and of course, permeability potential. The Morrow is the mystery of the ages but now the Miss. can be a very good formation if trapped. It all depends. I have a few wells in Stanton county drilled in the 80's and still producing from at least 3 formations. Its serendipity to some extent. Drill for the Morrow and find it wet but a structural bump in the St. Louis produces well but offsets are dry.?????? For that reason, I don't like to limit lessee's t depth in this area. Let them spend their risk money as they see fit. Something good could happen to everybody. Deal with development obligations in another way.
Gary Hutchinson
De said:
Thank you Gary. I work with minerals / royalty owners in SW Kansas so am familiar with the oil/gas leases and some of the new plays in the area as well as who the players are, at least in this area. I however do not have my "ear to the ground" in Eastern Colo. (Kit Carson Co. and Cheyenne Co.) so do not know what folks are getting there. It also appears the drilling activity is still more to the east of my interests, however I understand from family members of family members they have committed as many available rigs that they can to that area.
And we all know what the wells are hitting on the east side of a county may have little to do with what the wells are hitting on the west side. Just depends ... Has there been any seismic/geological testing in the north and northwest part of the county yet?
Gary L. Hutchinson said:De,
There are strong geologic reasons for your observations in addition to the recent reported discovery in 48-15. I expect some good heavy weight operators to be making an appearance in Eastern Cheyenne county as well as south and east. Location and size are most important to the reliable operators. I have direct knowledge of bonuses in good geologically proven areas for large acreage well in excess of the amounts the speculators were offering a couple of years ago. However, the fact remains, that the terms of the lease will make the bonus insignificant when it comes to royalty payments. The next phase of development in the area will be a whole new ball game for the mineral owner. Be prepared to make fair deals that are good for the both parties.
Turns out you were wise to hold out. You apparently knew more than the leasing company. Those that took 5 + 5 year leases just to get some bonus money may be proven to have shot themselves in the foot. If you have a lot of acreage, learn about the potential for each parcel and don't put all your eggs in one lease basket. It isn't going to be that sort of a play this time around.
Gary L Hutchinson
Minerals Mangement
Gary, as you are probably aware many of the wells in SW Kansas were originally shallow wells in the Council Grove, Chase and Morrow. Once they were under lease there was little incentive to explore deeper zones because they were still getting gas/oil from the shallow wells and as they were now under a lease it was always "there for the taking" whenever the company decided they wanted it. Decades ago mineral owners got things changed around that in some situtations they could made demand on the company to either explore the deep zones or release them. Many companies released them from the lease, and now a second o/g lease holds specific deeper zones. As exploration is now going on for the Mississippian and exploration as to the viability of CO2 sequestration why would one not restrict to zones? The company pretty well knows their target zones, if they want to drill in a different zone make them come back and get another lease for that zone. Why would one give away the chicken, cow, pigs and horses at the price of the chicken when they only needed to give away the chicken? Now this is not to say that the companies want to always do this as of course they want everything, everywhere for as long as they can get it at a very cheap price. :)
De,
I don't disagree with you logic but with your implementation of the logic. I want an operator with proven geologic talent to apply that talent to my lease however the operator sees fit. My objective is to get production as that is where the money really comes from, not speculative lease bonuses or purchases. I also don't care which formation the production comes from. The operator is a better judge of how to do that than I am and I don't want to tell the operator how to spend its risk money. What I do want and demand is that the operator either develop what it finds in my minerals or give it back by a time certain no questions or legal actions required. To me the owner sets the price he wants for a lease and has the right to select the lessee and negotiate the terms of the lease to suit both parties. The owner's price should reflect his confidence in the operator/lessee, the share of minerals the owner is willing to hand over to the operator for exploration, and the true royalty rate to be paid exclusive of untraceable and arbitrary product costs. I'm not clever enough to know for certain what minerals are going to be exposed and frankly, neither does the operator's geologists until they get there.
By the way, I wouldn't say that the Morrow is a shallow formation.
Gary Hutchinson
De said:
Gary, as you are probably aware many of the wells in SW Kansas were originally shallow wells in the Council Grove, Chase and Morrow. Once they were under lease there was little incentive to explore deeper zones because they were still getting gas/oil from the shallow wells and as they were now under a lease it was always "there for the taking" whenever the company decided they wanted it. Decades ago mineral owners got things changed around that in some situtations they could made demand on the company to either explore the deep zones or release them. Many companies released them from the lease, and now a second o/g lease holds specific deeper zones. As exploration is now going on for the Mississippian and exploration as to the viability of CO2 sequestration why would one not restrict to zones? The company pretty well knows their target zones, if they want to drill in a different zone make them come back and get another lease for that zone. Why would one give away the chicken, cow, pigs and horses at the price of the chicken when they only needed to give away the chicken? Now this is not to say that the companies want to always do this as of course they want everything, everywhere for as long as they can get it at a very cheap price. :)
The St. James Episcopal Church in Fremont, NE has recently been advised that it has an oil and gas interest which Westphal Energy, LLC would like to lease in 16S-45W-30; NE, SE, Cheyenne County, Colorado. The terms they propose to the church are $250.00/net acre , 3 years prim/5 yrs opt--1/6th royalties.Does this appear to be a fair and market appropriate going rate for such an interest? Any insight or comments would be most appreciated by the church.
Cheyenne County is starting to get busy.
2573-NOTICEOFINTENTTOCONDUCTSEISMICOPS7570.pdf (131 KB) 2574-CheyenneCountySeismicOperations.pdf (459 KB)the Church minerals are in an area that I think should be worth more per acre and that no extensions are necessary and production cost sharing should not be allowed. The minerals are in a well known geologically anomalous area that is going to get great attention in the next few years. Large, well financed operators should be your lessee targets. My clients are getting much better deals and I've been told of much better deals by other land owners. If you have a few acres, it doesn't make much difference but value /acre goes way up with larger acreage. Short answer_you can look forward to better offers if you are patient.
NIcholas J. Lamme said:
The St. James Episcopal Church in Fremont, NE has recently been advised that it has an oil and gas interest which Westphal Energy, LLC would like to lease in 16S-45W-30; NE, SE, Cheyenne County, Colorado. The terms they propose to the church are $250.00/net acre , 3 years prim/5 yrs opt--1/6th royalties.Does this appear to be a fair and market appropriate going rate for such an interest? Any insight or comments would be most appreciated by the church.
Land use documents are starting to show up in some sections of Cheyenne County. The company that is on record for conducting 3D Seismic Operations has begun in areas shown in the attached documents.
2571-SeismicLandUse1.pdf (773 KB) 2572-SeismicLandUse2.pdf (713 KB)I have 100acres in Cheyenne and have joined with the SECORO group of land owners. We are getting some very good information on what is going on around us, especially in Lincoln County with Nighthawk pulling out an amazing amount of oil. Cheyenne just had a seismic survey done on it, and I believe we are waiting to see what happens after June 30th when McClendon is out of the picture with CHK. I would keep holding out because Cheyenne could be the next Utica or Eagleford shale. Check out the SECORO website for pics & info.
This is a picture of the Pronghorn well tank battery in Cheyenne County taken by myself 6/9/2014. Well is currently in WO (work over) status according to the COGCC site.
I was looking thru well status's in Cheyenne county and found a couple of interesting things. First being that on 5/15/2014 an inspection of the Pronghorn well by the Colorado Oil and Gas Commission found the well Shut In Temporarily Abandoned and in violation of COGIS rules. Below is a picture from the COGIS site of the well head.