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Seismic Survey And Possible Oil Lease

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Seismic Survey And Possible Oil Lease

Postby Dewey » Sun Apr 30, 2017 6:51 pm

I recently received a letter from Fulcrum Exploration saying they are planning to conduct a seismic survey on land that I own in Tillman County OK.(Southwest Quarter(SW/4) A/D/A lots 3 &4 and E/2 SW/4 Section 30, Township 2 South, Range 17 West)  The letter offered $10.00 an acre for permission to conduct the survey.  

The letter also indicated that they were interested in obtaining an option to lease my mineral interest at mutually acceptable terms.  Fulcrum has producing wells on land adjacnt to my farm.

Is the survery rate reasonable?  What are current leasing rates in this area.

Thank you for your consideration.
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Seismic Survey And Possible Oil Lease

Postby Farnham » Mon May 01, 2017 8:23 pm

Permit Map for Tillman

Susie, as I mentioned on the phone today, $10/acre for seismic is probably about the going rate in this area, and is actually the going rate in other area that are "better" so I don't think you did too badly with that part of it. I'd be wary of signing a lease "option" with them without reading it very carefully though. You don't want to tie up your minerals with Fulcrum now if someone else may offer you more when and if the seismic results come in "good." Even if Fulcrum IS the only one leasing later, they'll likely agree to pay more then than they will in an option now if the seismic results are promising. An "option" is not the same thing as a lease, but depending on how it's written it could still tie up your minerals in a way that's not beneficial to you, and perhaps at a lower bonus and/or royalty amount than you could receive later. I'd run it by an attorney before signing; preferably an oil and gas attorney. As of now there's currently not ANY leasing going on in your section or the surrounding sections that I can see(partly due to many of them being producing sections already.) The seismic results, if they end up doing it, could take a year or more to analyze. I would expect if they are promising results, the leasing will pick up in the area at that time, and will hopefully attract others besides Fulcrum. Right now; not so much. Previous bonus amounts for SHALLOW wells in this area were around $50/acre back in 2007. A deeper well would likely command a higher bonus. Fulcrum seems to be a driller of shallow wells in this area however, so don't expect spectacular bonus offers unless they go a lot deeper or hit a really big oil well nearby or something. As I mentioned on the phone, the Cowan well in 31-2S-17W is not bad, and is producing a fairly steady 2000 barrels of oil per month. Not a big well, but not bad. Most of the other wells surrounding your section are producing less than that, except perhaps sporadically(i.e. the city of Frederick's well I mentioned.) I've attached a map from Drilling Info, http://www.drillinginfo.com and used with permission, showing the permits issued for wells in Tillman County since 2007. The bunch of blue dots just south of Frederick is where your minerals are, and is almost exclusively "Fulcrum County" as they are the operator on that bunch of wells, and even the one down to the SE in 3S-14W. The other permits shown over in 3S-19W were permitted for Phoenix Production. Really, you're in one of the most active areas of the county currently, thanks to Fulcrum. Unfortunately since they're the only ones IN your area currently, there may not be much competition for leases if the seismic comes in good, but I'd still think twice about signing an option to lease with them right now. You can always lease later. Hope this helps you out. Frederick M. "Mick" Scott CMM RPL

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