I recently received an oil/gas lease offer of $300 per acre, 18.75% royalty, five-year primary term with a two-year extension for $300 per acre from Cypress Energy Corporation. Is five years too long for the primary term? Anybody have any other thoughts about the competitiveness of the offer? This is all new to me. Our land is near intersection of LA Hwy. 392 and LA Hwy. 111 where Tidbits & Tackle grocery store is located. I know a couple of other nearby landowners have also received offers. As a side note, this intersection is about three miles east of the new Continental Resources well - North Haddens Field. 

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Roger, I got the alert email for your new discussion.  I hope you'll get some responses from the Vernon Parish members.  There's not been much leasing activity in your specific area, so it's hard to compare what is "fair market" terms without some feedback.  I always prioritize the royalty fraction over the bonus and would gladly trade less bonus for more royalty if possible.  It is important to look at the size of the drilling unit to determine the percentage of the whole that your tract represents.  Obviously the more acreage you have, the better your negotiating position.  It is a good idea to understand the ramifications of some of the other lease terms.  For example, there is value in surface locations.  Tracts close to roads and located near the edge of drilling units may have value for surface use such as lease roads, pipeline (gathering system) pipelines and drilling pads.  I suggest that mineral lessors include a no surface use clause, just in case.  I would tell a landman seeking a lease that I won't necessarily deny surface use but I want the clause so I can negotiate the compensation for it and the damages or loss of use for the acreage.  I further suggest that you don't "warrant title" and that you stipulate a significant per acre price for any lease extension.  A three year primary term with a two year option to extend is common.  The five-two is less so and should come with a little better compensation.  After all those observations, I'll close with this:  the Austin Chalk in this specific area is not proven economic.  It is a tough nut to crack and for that reason I would be offering similar terms to Continental.  There is plenty of risk involved for all parties.  Good luck.

Adding to Skip's comments, considering the primary play in this area (i.e. the Austin Chalk), operators will try to put together a positive as inexpensively as possible as to up front dollars plus royalties given. Trying to get more term up front fits with the difficulties of this play concept - should need as much time as possible to see if this play may work out.

Ultimate Catch 22 here, i.e. mineral owners want best terms for them, but if mineral owners hold out for higher terms - the operator may just ditch the play in total.

Mineral owners get their big money once wells are drilled - leasing compensation is small compared to O&G production related revenues. And should consider this when dealing with operators in these tough play concept areas.

Interesting conundrum for sure.

I will post drilling updates on the Labokay 20-17H #1 in the Austin Chalk Group.

https://gohaynesvilleshale.com/group/austinchalk/forum/topics/conti...

Skip and Rock Man, thank you for your comments. Very good point about surface rights, that aligns with our preference both now and possibly in the future. I'll make sure we address that and your other recommendations. I also see the point of bonus money vs. royalties and will try and seek a happy medium understanding the AC seems to be tough to drill and produce. Thanks for update on Labokay 20-17H #1 on the Austin Chalk page. Hope they are successful with the well.

You're welcome, Roger.  Please pass the word, we can use more members.  Also this month, I am asking all my site "friends" and members who receive value from GHS to make a donation to keep the website up and running.  This is not Keith's primary job.  He has to work like the rest of us at doing something other than GHS.  He has a $3k fund raising target.  We can get there with modest contributions from most of the members who participate on a regular basis.  It's a good investment.

On 12/17, Nabors Drilling Rig #B15 reported 17 Days Drilling Ahead @ 13,862 on the Labokay 20-17H #1.

The permitted True Vertical Depth (TVD) is 9632' and the Measured Depth (MD) is 20,318'.  At 13,862', the wellbore should be in the "heel" of the lateral having gone horizontal.

Skip, good point about donations to the website. I'll follow up on that. Thanks for the Labokay update.

You're welcome, Roger.  Here's hoping that the full length of the permitted lateral is successfully drilled and cased.  The next couple of weekly reports will tell how smoothly that goes.

I see there is a new permit for Vernon Parish #253160 dated today 12/22/21

Thanks, David.  Brammer Engineering in the Sugartown Field.  Rock Man, does this look like an AC well?  Seems too shallow for AC in this area.  The permit should be entered in the database in the next 24 or so hours.

SERIAL

WELL NAME

WELL NUM

ORG ID

FIELD

PARISH

PROD TYPE

SEC

TWN

RGE

EFFECTIVE DATE

API NUM

253160

CROSBY LAND & RESOURCES LLC H

001

0683

8744

58

00

011

02S

07W

12/22/2021

17115202390000

 

PRMT DATE

SPUD DATE

STAT DATE

ST CD

12/22/2021

12/22/2021

01

WELL SURFACE COORDINATES

Surface Longitude

Surface Latitude

Lambert X

Lambert Y

Ground Elevation

Zone

Datum

93-2-55.72

30-53-46.26

1461885

814818

181.1

S

NAD-27

WELL SURFACE COORDINATES GENERATED BY DNR

UTMX 83

UTMY 83

LONGITUDE 83

LATITUDE 83

495320.14073442

3418118.81608048

-93.04897466

30.89638066

View GIS

BOTTOM HOLE COORD

EFFECTIVE DATE

END DATE

PLUGBACK TOTAL DEPTH

TRUE VERTICAL DEPTH

MEASURED DEPTH

LAT DEG

LAT MIN

LAT SEC

LONG DEG

LONG MIN

LONG SEC

COORDINATE SOURCE

LAMBERT X

LAMBERT Y

ZONE

COORDINATE SYSTEM

12/22/2021

11981

17148

30

52

52

93

2

53.99

02

1461954

809334

S

01

WELL HISTORY

SERIAL

WELL NAME

WELL NUM

ORG ID

FIELD

ST CD

PT

WELL CLASS

EFF DATE

END DATE

STAT DATE

253160

CROSBY LAND & RESOURCES LLC H

001

0683

8744

01

00

12/22/2021

12/22/2021

SCOUT INFO

REPORT DATE

WELL STATUS

MEASURED DEPTH

TRUE VERT DEPTH

DETAIL

12/22/2021

01

17148

894' FSL & 469' FEL OF SEC 11-T2S-R7W. PBHL: 716' FSL & 465' FEL OF SEC 14-T2S-R7W.

With this vertical depth, this looks like a Lower Wilcox SS target.

Sand Stone?

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