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Question
Hello, I just received a lease on Section 36, Township 21N, Range 25W, in Ellis Co, OK.  The lease contains 160 acres at 3/16--the lease is only for a year ... others have been for 3-years.  Can you tell me why a company (Mewbourne to be exact) would only offer a 1-year lease?  Is this common?  Do you have any information on production in Ellis Co?  I have several areas with mineral rights, I have signed several leases, but have not seen any production or royalties from them.  Any information you can give me will help, the documents that I receive might as well be in Greek! :)

Answer
Newfield is fixin' to drill the "Mason 36-1H" well in that section looks like, and since they already have it scheduled, there's no need for them to lease you for three years since they plan on drilling it in less than one. They would argue why pay for three when you only need one? I would assume, since there is already a small well in that section, that they are just wanting to lease your deep rights below that well, unless it has been plugged recently or something.

There is plenty of production in Ellis County, though none currently in your section, at least for the deep rights they are apparently after. There is a small oil well in your section currently as I mentioned, that you should probably be getting royalty from, but it's operated by "Bell and Kinley Company" not Newfield, so you'd need to contact them. It's probably a pretty shallow well. The name of it is the SHERRILL #1-36.

Most of the surrounding sections are producing too. You can keep up with all the production and permitting etc. activity on the Oklahoma Corporation Commission Website; which is the regulatory body for oil and gas in Oklahoma.

On the lease question, just because you sign one it doesn't mean it's going to result in royalty payments. A lease gives the lessee (oil company) the right, but not the obligation, to drill a well within the term of the lease (usually 3 years in Oklahoma.) If they choose not to drill a well. No royalty. If they drill a "dry hole" no royalty. Etc.


Hope this helps you out.
Frederick M. "Mick" Scott CMM, RPL
www.mineralhub.com
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Frederick M. Scott

Expertise

Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.

Experience

I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written several articles which have appeared in various oil and gas industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and landwork over the past ten years, and also worked as a professional landman and lease buyer for a time. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

Organizations
National Association of Royalty Owners (NARO); American Association of Professional Landmen (AAPL)

Publications
National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Education/Credentials
Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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