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Old    Jon (jon4pres)      Join Date: May 2004       09-01-2012, 10:07 PM Reply   
My dad owns some land that some oil lease guys are after and we don't know what to do.

No one in the area trusts the oil lease company. They make a mess, leave a mess, and we have talked to several people who say that they think the oil company is stealing their part.

Our options are:

Do nothing. Just keep doing our thing.

Lease to them with a guaranteed contract where there is a good payout regardless of oil production. We have a neighbor who got a pretty sweet deal doing this over the next 5 years.

Lastly,(and this sounds kind of crazy) have wells drilled, buy equipment and get in the oil business. We know nothing about pulling oil out of the ground but we talked to an oil guy the other day who said it is not that expensive or hard to do. He seemed to think we could get a couple of wells dug and up and pumping for less than 40k.

I guess I am looking for someone to either talk me into or out of the last option. So if there is anyone out there with any experience or ideas, I could use them.
Old    David Langston (rdlangston13)      Join Date: Feb 2011       09-02-2012, 2:16 AM Reply   
get a couple wells up and running for 40k?? That guy sounds like he is on crack. I work in the oilfield offshore and while things are more expensive offshore than they are on land I can't see drilling a couple wells for 40k.

Rig day rates on land are around 15-20k a day i believe and it will take much more than 2 days to drill a couple wells. Also you need mud, so you have to hire a mud company, cement, casing, ect. I can't see a land well being drilled for under 500k and I am thinking that that is on the cheap end. hell i think the average cost for an offshore well is something like 100 million a well.
Old    Matt (duramat)      Join Date: Feb 2008       09-02-2012, 10:03 AM Reply   
Im with Dave, 40K will buy you a couple of water wells. This industry costs alot of coin to get operational, then the regulations/standards that have to be regulated. Ontop of all that what if you have a spill and now have to clean it up, equipment does break. Im just in the maintennce in Prudehoe and its unreal how much is spent maintaining and in operations. Keep researching though

A neighbor of mine just spent 100K to redrill a well he has outside of Elko Nevada. Hes using some outfit that drills alot of waterwells, Im used to seeing drill rigs with tires larger than a frontloader and cost 1 Million a day to operate.

What kind of equipment are they using around your area for getting it? Pumps?

There are others that are more informed than I am, Im just throwin out what I know.
Old    Jon (jon4pres)      Join Date: May 2004       09-02-2012, 8:37 PM Reply   
The drilling rigs are small, they are on the back of a modified semi truck. I did some reading and it sounds like the oil is between 600 and 1000 feet. They are pumping salt water or steam in some of it to help pull it up. I don't know anything about the pumps but they look small and they stick a lot of them in the ground.

I
Old    David Langston (rdlangston13)      Join Date: Feb 2011       09-03-2012, 12:09 AM Reply   
sounds like they are using work over rigs to drill the well, those are considerably cheaper than a normal land rig but i dont think 40k for two wells cheap
Old    Jo Shmoe (joeshmoe)      Join Date: Jan 2003       09-03-2012, 8:36 AM Reply   
Don't go with the first offer, there were poor farmers in ohio that are millionaires now because the oil companies came in several years ago and leased the land, but the first farmlands that were leased hardly got any money.
Old    Jon (jon4pres)      Join Date: May 2004       09-03-2012, 1:29 PM Reply   
That is part of the thing. There is only one crew that is drilling in our area and no one is getting rich off of them. The other problem is that they destroy a field. Between all of their pumps, roads, lines, and tanks they just make a huge mess. I guess we are a little sentimental about the land and hate to see it turned into such a mess for such a low return.

http://www.runningfoxes.com/areas-of-operation.htm

This is the link to the company that is trying to lease from us. We are in the bourbon archer project right next to the devon south spot. Our neighbor just leased 80 acres to them and in one part of the field I bet there is at least 1 well per acre.

Has anyone seen Gold Rush? I have a lot of fear of being that guy.
Old    Paul (psudy)      Join Date: Dec 2003       09-04-2012, 7:10 AM Reply   
WIth horizontal drilling, if they get your neighbor, they will probably be getting yours as well. What you need to do is go talk to a local drilling company(one thats not trying to get your lease) and ask them what the going market rate is in your area. Markets can differ greatly by county. I have one client that is getting over 100K per month. He basically just dumped his farming operation. I have seen other offers at 2-3K per month.

You will not get into the oil business for 40K.
Old    Adam Curtis (acurtis_ttu)      Join Date: May 2004       09-04-2012, 10:02 AM Reply   
scrap the drillig yorself mentality....it's cost-prohibitive at your volume.

I agree talk to other landmen in your area if you can. If not , I would spend the money to hire a landman ( contract) to do some research for you and give advice. alot of oil production companies hire contract landmen to handle their leases.

They will tear up land, but they should be repairing damage.

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