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Question
Mr. Scott:  I appreciate the opportunity to ask a few questions regarding proposed lease terms offered to my sister and I.  We own the minerals under eight acres in Section 32, One south, Four west of Carter county, Oklahoma.  Heller has offered (on behalf of B&W of Oklahoma City I think)125 per acre and a 3/16 royalty for a paid up three year lease.  Do you know the formation target and are the terms commensurate with others in the area?  Also I am not sure what a "no deductions" clause is but I do understand a depth clause.
thank you for your help it is greatly appreciated.

Sincerely yours

Answer
I would also check with Continental Resources, as they are leasing in some of the adjacent sections this year. Also RD Williams. Both probably have Oklahoma offices. One or both of them might also be leasing for B&W. You can call and ask them.

Depending on the formation and spacing (you'd need to ask them) I would think you could get more than $125/acre. There have been several forced-poolings in the area recently. One, in 7-1S-4W was for $1500/acre and 3/16 royalty, which indicates leases were also averaging that amount. This was a pooling for the entire section however, so if B&W is only planning on drilling a shallow well on a smaller spacing (i.e. 80 acres, 160 acres etc.) then what they offered you might be more in line with the current rates. I would check with them, and also mention the forced-pooling above and that you area aware of some others that are pending in this township.

Most of the activity is in the northern part of the township (you are in the southern part) so you might not be able to get as much as you would if you were several miles north. Most of the poolings and drilling permits in this township recently have been for wells spaced at 640 acres and include the Woodford as one of the formations being pooled.

Another forced-pooling done in March of this year in 19-1S-4W (by Marathon Oil Company) was for $1300/acre and 3/16 royalty. It was also for the entire section.

If you are not in great need of the bonus money I would consider waiting until they force-pool the unit they are leasing. The pooling will give you several options for bonus and royalty to choose from, and should be in line with what others have been receiving. The risk in waiting for a pooling is that they may decide not to pool the unit, therefore you would miss out on this round if they don't move forward with pooling.

If you have any more questions you can contact me at the Mineral Hub website below. The "Mineral Hub News" page also has an article on oil and gas leasing tips you might find helpful.

Hope this helps you out.
Frederick M. "Mick" Scott CMM, RPL
The Mineral Hub
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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