New UMI in a paid-out well in Caddo Parish, Louisiana

We recently have been awarded by a judgment, the ownership of 20 acres' minerals in Caddo Parish.  The producing well there has Paid-Out some months ago.  We've not received a division order, etc.  And now the Leasee has just offered the option that we remain un-leased or that we may sign a lease with them effective now.

The lease is about $300 per acre bones plus a 0.25 royalty. Why should we sign a lease?  What are the major factors to consider?

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Permalink Reply by J B Nabors on August 2, 2014 at 3:21
The 25% royalty is a reasonabe offer. You might see if they will give you the same offer from First Production. I recommend you be sure to use a good O&G attorney before signing any lease.
Permalink Reply by Colquit Owner on August 2, 2014 at 3:45

So, J.B., (and others!), since I have the option of going UMI with an already paid-out well - - or signing a .25% lease, on the horizontal well in Caddo Parish, are you suggesting I not go UMI, but rather sign the lease?

We were awarded in a Judgment the minerals on our land effective March of this year.  The well has been producing for about 4 years, and paid out last December.  What would you do?  

And, if signing a lease is recommended, what are the best terms I could expect?

thanks. . . . . .  .. and,  HELP!

Permalink Reply by Skip Peel - Mineral Consultant on August 2, 2014 at 3:50

In considering a course of action in this case I suggest the following.  Forget about going UMI in a well that is largely depleted.  Consider that over time there will be a number of new, alternate unit wells drilled in the unit and a leased mineral owner will receive royalty income from day one of production on each.  No waiting for wells to payout.  No exposure to wells that for whatever reason never pay out.  The current well should not be the focus of consideration.  The focus should be on the wells to be drilled in the future.

Permalink Reply by Steve Powers on August 2, 2014 at 6:47

Where can I look up the well cost online?  I have a UMI for about 8 acres acquired by purchase of foreclosed property at sheriff's sale, where the existing lease was subordinate to the mortgage.  The well number is 244175, a strong Desoto parish well.

Permalink Reply by Skip Peel - Mineral Consultant on August 2, 2014 at 7:03

Steve, well cost for the HA RA SU94;PANKEY 22-14-15 H 001, S/N 244175 was $7,703,005.85.  Here is a link to the form, make yourself a copy and bookmark it.

http://ucmwww.dnr.state.la.us/ucmsearch/UCMRedir.aspx?url=http%3a%2...

Permalink Reply by Steve Powers on August 2, 2014 at 7:40

Thank you!

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