i have a mineral lease we are reviewing in south Arkansas.
When we asked about a depth provision, they wrote back that they will cover depths of only up to 4000 feet.


The offer is for $ 100 per acre and 3/16,

How would I reply to ensure that we are covered at any depth?

I have heard from other landowners to watch out for this

TIA

As a mineral owner your goal is to retain deep rights and limit depth covered in the lease to the formation the oil company is going after. Also I'm not that familiar with Arkansas but that bonus/royalty seems low.

Stan Crowch said:

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As a mineral owner your goal is to retain deep rights and limit depth covered in the lease to the formation the oil company is going after. Also I'm not that familiar with Arkansas but that bonus/royalty seems low.

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May be low but it may not be. I've leased anywhere from $3000/acre at 25% with a 60-page lease that included a $100k spud fee with a 90-day continuous drilling provision. I've also leased the State of Utah at $2/acre at 1/8. Just depends on location and activity.

I am 100% unfamiliar with Arkansas though.

OP - appears they are only leasing the shallow rights from you. If they want to produce anything deeper they will have to sign another lease.

How many net acres do you own? Just curious if it's enough to make going to an attorney worth it.

Thanks V8

Only 120 acres, so feeling like a small fish in a big pond, but in that area, most of the private landownership is split into 40's and 80's or less.

I have been told to watch out for an end around on a shallow lease.

This is not a wildcat, producing wells are scattered around in the area

coopfert90 said:

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Thanks V8

Only 120 acres, so feeling like a small fish in a big pond, but in that area, most of the private landownership is split into 40's and 80's or less.

I have been told to watch out for an end around on a shallow lease.

This is not a wildcat, producing wells are scattered around in the area

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So do you own 100% of the minerals under the 120 acres? Or do you only have a fractional interest?

Not exactly sure what an "end around" is. In Texas, there's no way for them to drill anything deeper than your lease allows. Otherwise they're trespassing and you become a working interest owner (partner in the well).

We have 100% split 3 ways in the family.

I was advised to determine what zone they are drilling in and at what depth.

I am told that if it is not in the lease, they could lease a deep zone to someone else and keep us out of it.

Just want to make sure we are covered in all zones leased, shallow or deep to cover all bases.

Thanks!

coopfert90 said:

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We have 100% split 3 ways in the family.

I was advised to determine what zone they are drilling in and at what depth.

I am told that if it is not in the lease, they could lease a deep zone to someone else and keep us out of it.

Just want to make sure we are covered in all zones leased, shallow or deep to cover all bases.

Thanks!

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Like I said earlier I am not familiar with Arkansas law. That being said I suggest you stop listening to whoever is giving you advice and talk with an actual oil and gas attorney (one that does this for a living and is currently drafting leases in the area).

If you sign a lease (and own 100% of the minerals) that specifies it only covers surface to 5,000 feet there is nothing else the company can do other than what is listed below. You own the minerals from the surface to the core of the earth.

In Texas, if they drill across your property without a lease you become a partner in the well. You are also responsible for the costs associated with the well and since hardly any person can ever cover this cost you will be carried by the company. You won't receive a check until the well reaches "pay out". If the well makes it to pay out, you will receive larger interest because you won't be diluted by any unit or royalty.

There are other scenarios in which other mineral owners on your tract can be pooled and you are left out of the unit but since it is all family owned I doubt anyone is going to be signing anything w/o everyone agreeing. This is only if the wellbore does not cross your property.

Remember - This is only how Texas is and I am not familiar with Arkansas. They may have something called forced pooling similar to Oklahoma in which you won't have a real choice other than to select rates given to you by the court.