Minerals of Oklahoma 2018

Back in September of 2017 Convey Energy examined mineral activity in Oklahoma. We had some recent requests to do a similar report for the 2018 activity.

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The data presented herein this report is based on land records that Convey Energy internally gathered from county courthouse records using our soon to be launched platform; Convey640.


WHERE

The below map illustrates the counties we examined; we primarily looked at the ARKOMA, SCOOP, STACK, NW STACK, and WESTERN OKLAHOMA regions.

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Data based on number of Mineral Deeds filed.

Data based on number of Mineral Deeds filed.

When applying a heat map to the counties we examined, we find that Grady County is the most active. This is not too surprising as Grady has witnessed a lot of activity ever since Continental announced their Springboard Project. The below graph further illustrates that mineral companies are targeting the Springboard area in Grady, The Merge area (located around the Canadian River), Western Blaine County, Northern McClain County (where EOG and Native are active) and southern and central Kingfisher (closer to the core of the STACK).

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There were not too many sections in the counties of Blaine, Kingfisher, Canadian, Grady, and McClain left untouched. The yellow represents sections where Mineral Deeds were filed.

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Borrowing Drillinginfo’s well permit shapefiles (permits approved in 2018), and overlaying onto our data you can see that a majority of the mineral buying occurred in those areas where a permit was present.

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WHO

This graph represents the TOP 12 Grantees (buyers) in Oklahoma in the counties we examined. They are colored by the counties of their activity. The graph reflects the number of times a Grantee appears in title. However, it does not represent the number of tracts they acquired (i.e. a Grantee who acquired 20 tracts in 1 Mineral Deed would only be tabulated as 1 in the graph.)

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We then took the top 12 Grantees and examined if they also showed up as Grantors. We highlighted the main Grantees targeted by the noted Grantors. In other words, we looked to see if any of the top 12 buyers were primarily brokering for another company.

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As you can see by the chart above, Echo Minerals, Saxet Petroleum, Inc., Cherry Creek Minerals, Dale Operating Company, and Brigham Minerals were popular end buyers. The TOP 12 Grantee chart can actually be re-written to be the TOP 8 Grantee Chart, comprised of the following companies:

CHERRY CREEK MINERALS/LONGPOINT MINERALS

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  • A division of FourPoint Energy

  • Website: LongPoint Minerals

  • Headquarters: 100 St. Paul Street, Ste. 400, Denver, CO 80206

  • Recently announced a capital raise of over $846 Million to acquire high-growth, long-long mineral interests in top U.S. resource plays (press release)

 

THE MINERAL RESOURCES COMPANY

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  • A division of Continental Resources

  • Headquarters: 20 N. Broadway, Oklahoma City, OK 73102

  • Announced in August 2018 that Continental Resources and Franco-Nevada (a Toronto-based royalty company) to spend up to a combined $125 million per year for the next three years to buy mineral rights in Oklahoma’s SCOOP and STACK Plays (per newsok)

 

ECHO MINERALS LP

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  • A division of Echo Energy

  • Headquarters: 3818 Northwest Expressway, Suite 840, Oklahoma City, OK 73112

    • Future Headquarters: 120 Robert S. Kerr, Oklahoma City, OK at the Ziggurat Building

  • Echo currently manages assets in the SCOOP, STACK, Midland, and Delaware basins in Oklahoma and Texas. 

 

XP2 HOLDINGS

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  • A division of Expro Minerals

  • Headquarters: 307 W 7th St., Suite 810, Fort Worth, TX 76102

  • Actively purchasing mineral rights in the Anadarko Basin of Oklahoma. 

 

ALLDALE MINERALS III, LP — through its subsidiaries Orchid AD3, LLC, Tundra AD3, LLC, Arbala AD3, LLC, and North Fork AD3, LLC

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  • A division of Dale Operating Company

  • Headquarters: 2100 Ross Avenue, Suite 1870, Dallas, TX 75201

  • Alliance Resource Partners LP (NASDAQ: ARLP) entered into definitive agreements to acquire the general partner interests in AllDale Minerals LP and AllDale Minerals II LP and all of the limited partner interests in AllDale not currently owned by ARLP’s affiliate, Cavalier Minerals JV, LLC, the company said December 17, 2018 (per Oil & Gas Investor)

 

LAND RUN MINERALS II, LLC

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  • A division of 89 Energy

  • Headquarters: 105 North Hudson Ave., Suite 650, Oklahoma City, OK 73102

  • An aggressive, growth-oriented oil and gas exploration and production company with a proven track record as an early-mover in Mid-Continent resource plays

 

BRIGHAM MINERALS, LLC

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  • Website: Brigham Minerals

  • Headquarters: 5914 W. Courtyard Dr., Suite 100, Austin, TX 78730

  • Privately-owned company focused on acquiring oil and gas mineral rights in unconventional, shale plays throughout the United States – including the SCOOP and STACK plays in Oklahoma.

 

SAXET PETROLEUM, INC. — investment vehicles Saxet III Minerals, LLC, RIP3, LP

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  • Website: Saxet

  • Headquarters: 510 Bering Dr., Suite 600, Houston, TX 77057

  • Raised $100 Million from Post Oak Energy Capital in August 2018 to acquire mineral and royalty interests in prolific U.S. basins (press release)

 

CONCLUSION

Like in 2017, the mineral game is dominated at the top by a few well funded groups. These groups are paying premium prices ranging from $10,000/nma - $25,000/nma. A majority of the activity takes place in areas where an oil and gas well permit is present, which makes sense because the mineral companies reflected are trying to capture the early months of production where the wells experience the highest production rates. If we were to examine more traditional mineral companies (for instance family backed companies whose purchase prices per nma are significantly lower), we would likely see them acquiring less risky acreage that has had a steady flow of production and acreage that can be more accurately modeled with engineering software.

It is still a bit worrisome to see so many companies relying on the same few end buyers. It raises the risks for companies to be caught holding acreage and/or not closing on deals they have under agreement, should the end buyers close their funds. Additionally, it can be tough for those not paying the premium prices to enter the core regions; which premium prices are a good thing if you are sitting on the landowner side of the fence.

The lower oil prices we have been experiencing will likely slow down drilling activity and lower acreage prices. Mineral owners and other sellers may be a bit shocked when they find out that their offers have been pulled or drastically lowered. The mineral game is risky and there is a lot of money being thrown around. We at Convey Energy cannot accurately predict what is going to happen in 2019, but we will be here watching, analyzing, and reporting the trends, story lines, and opportunities for the upcoming year.

Convey Energy Consultants


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