Bakkan Shale Area N.D./Montana

Oil and Gas Leasing Help
#1

My 88 year old dad and I have dozens of small mineral acres rights in Northern eastern Montana.

Most in Sheridan county and some in Daniels.

Are these viable or 'hot area' right now?

I have a naive question about quantifying your acreage.

Say you have 12.5 acres(mineral rights )in a certain section. Oil is hit in that section and production commences. Are your 'net' acres identified some how or do you get a percentage, based on the acreage you own ( mineral rights ) out of 640 acres ( section area ). ??

He has been (dad) been approached to lease 'ceratin' acreage, and the company, offered to lease for 5 years +1/6th @ $100.00 per acre. the company told him some of his acreage is worth $300.00 and some not much so they came up with $100.00 average.

Thanks

dave

#2

PLEASE FOLKS!! I understand the excitement of your possible windfall of "found money" and I realize all the freedoms and possibilities that may be provided to you by these, but before you make YOUR decision please watch the documentary "Gas Land"..…

Thank You

#3

Your mineral interest is based on the amount of mineral rights owned within the lease acreage. if the lease is 640 acreas and you own 12.5 than your interest is .01953125 (1.95%) of the lease.

You have the option to participate in the drilling however you will be required to pay your percentage of the cost of drilling and work-over (Drilling Opinion). Depending on your personal resources this could be a significant amount of cash that could be lost if it turns into a dry hole.

Another option is to lease your mineral rights usually for upfront bonus $$/acre and a percentage revenue, in your case 1/6 .

Do a lot of research on any company that offers you a lease agreement. There a number who are not E&P operators at all they just want to get their hands on your mineral rights for less than what you would get from the actual Operator of the well. Also talk to other mineral right owners in your area for input.

You may not want to lease any mineral rights until a company actually applies for a drilling permit with plans for a site pad. At that time the operator company will contact you.

Also research what the local producing wells are making in your area. Some wells in the Bakken and Three forks zones are producing 3-5k bbls/day. This would impact the value of your mineral rights and you could/should get more $$/acrea and 3/16 to 1/5 per acre.

#4

Sounds to me that they are trying to get something cheap. Lease flippers probably. Tell them to leave the cheap acres out of it, and see what they say. I’d also get a competetive bid if possible. If the mineral acres are scattered over what would be many pools, I’d lease acres in each section seperately as a back-up to your pugh clause which you should also have. RWK

#5

Dave:

We have 40 net mineral acres in Sheridan County that was leased in 2009 for $55/acre with a 16.67% royalty. This lease bonus is low considering what bonus rates are going for today. I have been keeping up with both Sheridan and Roosevelt Counties and currently, Sheridan has seen little drilling activity. There was a permit issued recently for a well location in Sheridan County near the ND border. I believe the permit was issued to Marathon. I would shop around for a good $/acre bonus as I feel this area will eventually become active in the Bakken/Three Forks drilling. I would guess that this company is willing to give more $/acre on the areas closer to the ND border. You can also go to the ND Industral Commission website to see what $ lease amounts were at State sales for Sheridan County. These will be a higher amount than you will recieve but it will give you an idea about the $ amount. One problem in getting top dollar in Sheridan County is the lack of proven drilling. You might want to wait until the drilling activity picks up in this area where your $/acre amount will go much higher if the drills produce good production.

#6

Thanks.

What township did you lease.

Thanks againcharles s mallory said:

Dave:

We have 40 net mineral acres in Sheridan County that was leased in 2009 for $55/acre with a 16.67% royalty. This lease bonus is low considering what bonus rates are going for today. I have been keeping up with both Sheridan and Roosevelt Counties and currently, Sheridan has seen little drilling activity. There was a permit issued recently for a well location in Sheridan County near the ND border. I believe the permit was issued to Marathon. I would shop around for a good $/acre bonus as I feel this area will eventually become active in the Bakken/Three Forks drilling. I would guess that this company is willing to give more $/acre on the areas closer to the ND border. You can also go to the ND Industral Commission website to see what $ lease amounts were at State sales for Sheridan County. These will be a higher amount than you will recieve but it will give you an idea about the $ amount. One problem in getting top dollar in Sheridan County is the lack of proven drilling. You might want to wait until the drilling activity picks up in this area where your $/acre amount will go much higher if the drills produce good production.

#7

I appreciate your valuable insight .


Have you heard of Kelly Oil and Gas out of Michigan ? That's who contacted him.


ThanksL Brigham said:

Your mineral interest is based on the amount of mineral rights owned within the lease acreage. if the lease is 640 acreas and you own 12.5 than your interest is .01953125 (1.95%) of the lease.

You have the option to participate in the drilling however you will be required to pay your percentage of the cost of drilling and work-over (Drilling Opinion). Depending on your personal resources this could be a significant amount of cash that could be lost if it turns into a dry hole.

Another option is to lease your mineral rights usually for upfront bonus $$/acre and a percentage revenue, in your case 1/6 .

Do a lot of research on any company that offers you a lease agreement. There a number who are not E&P operators at all they just want to get their hands on your mineral rights for less than what you would get from the actual Operator of the well. Also talk to other mineral right owners in your area for input.

You may not want to lease any mineral rights until a company actually applies for a drilling permit with plans for a site pad. At that time the operator company will contact you.

Also research what the local producing wells are making in your area. Some wells in the Bakken and Three forks zones are producing 3-5k bbls/day. This would impact the value of your mineral rights and you could/should get more $$/acrea and 3/16 to 1/5 per acre.

#8

I havent heard of them until now however, I do not keep track of all independant E&P companies. They are traded on the stock exchange (KOCG) with primary interests in Louisiana. They are a legitimate operator.

I agree with others that your lease bonus $$/Acre sounds low. I would think at a minimum you should be able to get 600-800/acre on a 3 year lease and 3/16 th (18.75%) royalty. Dont rush to sign a lease keep in touch with the other mineral right holders for feedback and look for activity that might signify drilling interest such as seismic surveys (if they have not already been done). Ask Kelley (Landman) if they have performed any sight surveys Dont be shy about asking them any questions?

Dave (Daniels/Shridan County) said:

I appreciate your valuable insight .


Have you heard of Kelly Oil and Gas out of Michigan ? That's who contacted him.


ThanksL Brigham said:

Your mineral interest is based on the amount of mineral rights owned within the lease acreage. if the lease is 640 acreas and you own 12.5 than your interest is .01953125 (1.95%) of the lease.

You have the option to participate in the drilling however you will be required to pay your percentage of the cost of drilling and work-over (Drilling Opinion). Depending on your personal resources this could be a significant amount of cash that could be lost if it turns into a dry hole.

Another option is to lease your mineral rights usually for upfront bonus $$/acre and a percentage revenue, in your case 1/6 .

Do a lot of research on any company that offers you a lease agreement. There a number who are not E&P operators at all they just want to get their hands on your mineral rights for less than what you would get from the actual Operator of the well. Also talk to other mineral right owners in your area for input.

You may not want to lease any mineral rights until a company actually applies for a drilling permit with plans for a site pad. At that time the operator company will contact you.

Also research what the local producing wells are making in your area. Some wells in the Bakken and Three forks zones are producing 3-5k bbls/day. This would impact the value of your mineral rights and you could/should get more $$/acrea and 3/16 to 1/5 per acre.

#9