Why would oil company extend lease by 1 year

Texas Mineral Rights Yoakum County, TX
1

I have a current lease in Yoakum sec575 d. I am 5 months away from the end of my 2 year extension. The company has stated that they are going to drill in that section and want to lock up the lease till they do. The offer is 500acre 25%, Thoughts? Also if you have a lease that benefit a lessor, please send.

2

Take the offer!

3

David,

Why subsidize the lessee's business? Do they subsidize yours? 5 years of plenty of time to finance and drill a well in Yoakum. If they can't get it done, give someone else a chance. Talk is cheap. Leasing minerals shouldn't be cheap in your area. Not today, anyway. Do you want an incompetent operator calculating your royalty checks?

Gary L Hutchinson

Mineras Management

1 Like
4

The most likely answer is because they want to drill a well but can't get to it in the next five months. I'm not sure I follow Mr. Hutchinson's logic or agree with the numerous assumptions he jumped to based on the limited information you gave. He seems to have forgotten that 14 months ago we were seeing $26 oil and banks and funders were closed for business. The bottom line is that is good money for Yoakum county and I'm guessing you do not have another suitor or you would have mentioned that. Worst case scenario they do nothing and it is unleased a year from now.

~always be cautious when receiving "message board" advice. It's easy to be critical and difficult when it is someone else's money you are dealing with.

5

If the offer is an extended one year lease, with expiration after one year, I would accept the offer. Don't accept any offer for "until they drill."

6

how can i find out when the permit allows them to drill?

7

JUST A THOUGHT

Have your oil and gas attorney add a clause to the lease stating if they don't begin the actual drilling of the well within the one year time frame they will pay the lessor $25,000 or maybe more. Pick a number and present it to them. If they are that anxious to keep the lease they should negotiate in good faith.

Clint Liles

8

David,

After checking the GIS Map I see where Walsh Petroleum has an approved permit(501-36794)for a Horizontal well(4,884' lateral)(April 3, 2017) beginning in Section 543 and ending in Section 576 next door to the West of your Section 575.

http://webapps.rrc.state.tx.us/DP/drillDownQueryAction.do?fromPubli...

Walsh Petroleum also has another approved permit this year for another horizontal well in Section 576(501-36792).

http://webapps.rrc.state.tx.us/DP/drillDownQueryAction.do?fromPubli...

73c51dbf10d20b651f0f52dffb66ab23a71b0755.JPG818×578 87.1 KB

CLICK ON MAP TO ENLARGE

DRILL BABY DRILL

Clint Liles

9

Thanks Clint,

I Have been searching for this permit but I can't find it. Riley Exploration have no permits pending.

10

Is Riley the company you are dealing with?

Clint Liles

11

David,

This link will take you to all the approved permits for Yoakum County from January 01, 2017 thru April 25, 2017:

70 permits/7 pages

http://webapps2.rrc.state.tx.us/EWA/drillingPermitsQueryAction.do?pager.pageSize=10&pager.offset=0&methodToCall=search&searchArgs.paramValue=|1003=8A|1004=501|1005=beginsWith|1008=beginsWith|1012=beginsWith|1015=beginsWith|1024=01%2F01%2F2017|1025=04%2F25%2F2017&rrcActionMan=H4sIAAAAAAAAAM1Ry07DMBD8mnK01k7c5LKHCJUzLRU9RD24iZVayktrR4CUj2cdQIKUM-Jizc6uZ8fjWQKgmiVIlHdEVVEFN_SHiuoSzrjwL_ZixtErwW3hgwlWhFcx-U1S5MATCjfqYXcqGCYR1uTa1vXNo6XOBb-fLL19yIp64KEUOxuuQ30c7k3bMqGRbJioPw5P1lB1ZSpHuHFT-qVbUOPFaMh0z6ad7GKSF-dxP2trkBFovNjG9f7kQtRjwR-1VKt6Na9SBMlvWQ4FMoucRkhjqT-5lUP5d3n5r5y2OJrG0rc8fg1Pnsv1XDTLH69QwpxgBnMakcZs3jK4vf_fwn8HA_kAbLkCAAA

I see there are some Riley permits in this group.

Clint Liles

12

None are in 575. I wonder why there is action. I have had 3 calls. one with an offer to buy for $3000 per acre

13

David,

This link is to Production Data on a well(501-36432)(Lease # 19212) drilled by Apache in 2014. This well is approximately 5 1/2 miles S/SW of your Section 575/A-571

http://webapps2.rrc.state.tx.us/EWA/specificLeaseQueryAction.do?tab=init&viewType=prodAndTotalDisp&methodToCall=fromGisViewer&pdqSearchArgs.paramValue=|2=03|3=2016|4=02|5=2017|103=19212|6=O|102=8A|8=specificLease|204=district|9=dispDetails|10=0

I would say between $15,000/$25,000 per acre would be more realistic as a sale price. And as oil gets closer to $75-$100 per barrel these prices will skyrocket.

JUST MY OPINION

Clint Liles

14

Please send me the contact info. If you could give me an idea of any bonus money that would be very helpful.