Panhandle leases out Tonkawa shallow rights

Leased out: Panhandle leases shallow rights in Oklahoma properties

US explorer Panhandle Oil & Gas said it has leased out the shallow rights to 2846 acres in the liquids-rich Tonkawa play in Oklahoma to a large independent producer for about $5 million.

Panhandle will keep an 18.75% royalty interest from all future production; the deal does not include any existing production or any of Panhandle’s booked reserves.

The Oklahoma City-based company also retains the deep rights  to deeper zones, including the Hogshooter, Cleveland, Marmaton and Granite Wash formations.

The leased rights extend from the surface to 100 feet below the base of the Tonkawa, also known as the Virgilian.

The acreage, which was leased to an unnamed “large independent”, is in Roger Mills County, Oklahoma. The lessee paid  about $4.98 million for the rights for three years, with an option to extend to a fourth. 

The lessee also has the right of first refusal to the deep rights, “should Panhandle elect to market any of these rights during the primary term of the lease”. 

"We have retained our rights to all formations below these shallow leases, which in our opinion, contain the potential for multiple producing horizons, and should yield better and more predictable well results,” Panhandle chief operating officer Paul Blanchard said. 

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