Oil/Gas/Gas Prospects in Stephens County, OK
From family inheritance, my two sisters and I each own mineral rights to 20 acres in Stephens County, OK (Sec.37/2S/4W). Last November, JackFork Land on behalf of Continental Resources exercised their right to 3-year lease extension for $100/acre.
Subsequently, Continental Resources petitioned the State of Oklahoma and was granted 640 acre drilling space. Although the mineral rights are under lease, for the past few months we have been receiving an average of an offer a week from other "Landsmen" --- up to $950/acre to lease and $4,300/acre to buy. This heightened interest makes us believe that development may be imminent. Can you comment on the prospects for gas development in this area? What is the likely timeframe? At 3/16, what might be a typical royalty payment per acre? Obviously, we're novices. THANKS.
Development may be imminent but that is closely held information by the potential drilling companies. They don't want other drillers to get wind of their potential find and go out and compete with them for acreage.
The landmen may be attempting to lease because they know that Continental has activity in the area and they are not aware that an extension has been executed and paid. This means that you can't lease until the 3-year period expires. You can sell these mineral interests and if you have some other place where the money can be put to use you should consider this option. If you do not have any other place to invest then I would not advise you to consider any offer to sell.
So, for the fact that decisions to drill are highly scientific and I'm not privy to that science, I cannot comment on the viability of drilling, nor the timeframe. For the average royalty payment...again, I'm going to be very blunt. - not a soul in this world knows. There are just too many variables. Royalty is made up of three important considerations:
1. Production that occurs from the well. Not even the company that is going to drill knows what the production rate, if any, will be,
2. Price paid for the product. Natural gas is about $4.00 per BTU. If the product is low BTU then more production will be required for 1 BTU. If the product is oil then you will receive about $80.00 per barrel of oil.
3. The size of the unit. If you own 20 acres in a 200 acre unit then you will receive a larger share of the money than if the unit is a 1280 acre unit.
I wish I could be more helpful but that is the nature of oil and gas drilling and production. I would not count on more than about $50.00 per month in royalty revenue.