I just received an offer concerning Section 19-1S-2W (Madison 4-19-32XHW and Madison 6-19-32XHM) from Turner Oil and Gas Properties acting on behalf of Continental Resources. They are proposing the drilling of the Madison horizontal wells to test the Woodford and Sycamore formations in Carter County from which I receive revenue. The offer was to either participate in the cost for the drilling or lease/assign for $4,100 per acre delivering an 87.50%net revenue interest, $4,000 per acre at 81.25%, $3250 at 80.00%, or $2,500 per acre at 75.00%. I understand all of this but the last option was “Elect the applicable overburdened option provided in the Pooling Order to issue by the OCC covering Section 19-1S-2W.” Can someone explain that last part to me and am I obligated to pick any of the choices? Thanks in advance for any input.
That last sentence would only apply if you are a leasehold owner and your have a combination of burdens, being royalties and/or overriding royalty interest that would be greater than 25%. That would make the interest overburdened because the net revenue interest would be lower than 75%.
At this point you are not obligated to select these choices. You can always wait to get pooled.
If that was the information letter, then you do not have to answer it. Waste of time in my opinion. You can either choose to lease or you can wait for the force pooling. You can lease with Continental or any of the other third party companies that will likely come calling. You will eventually have to either lease or go to the pooling. Most of the savvy mineral owners would want the higher royalty as the bonus is piddly compared to increased revenue from a higher royalty on the original and any infill wells over the years.
Thank you for your responses. I’ve gotten a lot of offers to lease before but this comment is new to me. " Please be advised your election made pursuant to this letter shall not serve as or be deemed in-lieu of your obligation to provide a timely written election and/or prepayment of well costs as provided in any Pooling Order to issue by the OCC". I have no idea what that means. I plan to pass on this one.
That sounds like the language usually seen in the information letter. I never sign those, but I do put them in my files. They are a waste of my time and postage. You must deal directly with the sender or another agent to lease with an actual lease form or wait until the force pooling and directly answer the pooling.