Retained mineral rights may pay off for Red Willow County

McCOOK, Nebraska -- Two months ago, Red Willow County commissioners sold a quarter-section of land gifted to the county, and they retained half-interest in the mineral rights.

That decision to share the mineral rights with new land owners may prove to be quite beneficial, as commissioners Monday morning signed a lease agreement with Forestar Petroleum Corp., a Denver-based company that wants to test for oil on the land. The land is located in the southwest quarter of Section 1, Township 2N, Range 30W, southwest of McCook.

In December of last year, commissioner Vesta Dack strongly recommended that the county retain a portion of the mineral rights, as oil exploration and drilling activities are ramping up throughout Southwest Nebraska. The board voted unanimously Dec. 2 to retain 50 percent of the mineral rights on the land for 20 years or as long as production continues.

The quarter section of irrigated farm land sold on Jan. 8 for $616,000 to Caleb and Joy Trail of rural McCook.

Oil and gas lease broker Roger Gouldner, of R. Gouldner Co. LLC, McCook, told commissioners Monday that, on behalf of Forestar, he has obtained a lease with the Trails for their surface interests and for their half-interest in the mineral rights. He needed the county's approval of its lease to proceed with the lease with the Trails.

Commissioners agreed to a three-year primary lease term with a three-year extension provision (or as long as actual oil production continues), and a share of production.

Gouldner said that Forestar wants to start 3D seismic survey testing for possible drill sites, and performs these tests only between November and April to avoid farmers' crop growing seasons.

"Hopefully, we'll find a gusher under there," Gouldner told commissioners.

Gouldner said that Forestar contracts with a company called LoneStar Geophysical Surveys of Oklahoma, and that they use a wireless seismic process that they feel results in less distortion from wind and vibration at the geo marker locations, improved 3D data and less impact on the land than created by "shot hole" dynamite and vibrosity truck 3D processes and wired geo markers (geophones).

Gouldner said that Forestar is interested in oil and gas exploration, production and marketing, and not just a wide-angle "land grab." He said he has worked with Forestar (previously "Credo Oil") since 2009 and worked extensively on leasing lands for oil exploration north of Indianola. He said that using new 3D information, Forestar has been able to find oil and put pumping units on some previously "dry holes" and abandoned wells.

Commissioner Dack said that she and husband, Dean, own land in the northwest corner of the county and that they have experience as landowners with Forestar. Dean is also the field inspector for the southwest area of Nebraska for the Nebraska Oil and Gas Conservation Commission.

"Forestar is an outstanding company," Vesta Dack said. "They have the respect of landowners. They take care of the land."

Because of Forestar's reputation in the area, Dack made the motion to sign the oil and gas lease presented by Gouldner. The vote was unanimous.