I have minerals in North Dakota, Billings County, Township 142N, Range 98W, Section 26 & 27. Who is leasing there and what are the estimated lease terms?
BAlanMichael:
Looking at the GIS map, active wells exist within close proximity to your mineral area (East and West). You need to do some research in regards to the production figures on these wells as this will have a major impact on your bonus amounts. I would negotiate for no less than 20% royalty with a lease term no longer than 3 years. You also might want to add pugh clauses to your lease. I don't have the production figures on these wells mentioned above but someone with a NDIC subcription could look these up.
The reported IP's have been modest in that area, with 150, 200, or 300 barrels per day being the general range. However, there are also several nearby wells yet to be reported. I can't provide the going lease rates but would agree with Mr. Mallory. If you want to lease keep it 3 yrs or less, ask for a 22% royalty (with 20% being the absolute floor), and definately lease your interests separately (ie... sign one lease for Section 26 and another one for Section 27), don't put all the interest on a single lease.
On my plat maps I show OXY already has a drilling permit on Section 27 NENW (with Sec 27 tied with Sec 34 as a 1,280 acre drilling unit). So if your minerals are open, and you wish to lease, contact OXY as soon as possible. I'd guess your net interest is rather small or they would have called you long before now.
The other companies which are active in your immediate area (142N 98W) is Continental Resources (CLR), and XTO (an Exxon subsidary). You should contact all three (OXY, CLR, & XTO) and offer your interest to each. Good Luck.
Dear Charles,
Thank you for your valuable information. I have several questions:
1. My lease is up 01/06/2013, Oxy has a well plan in the works and they intend to begin drilling in March/April. Do I negotiate a new lease now? Or will my current lease be in effect?
2. If I don't have a lease, what happens then? How do they determine my share of the production, if the well is a producer?
3. Is it better to have a lease or not have a lease, which is in my best interest?
charles s mallory said:
BAlanMichael:
Looking at the GIS map, active wells exist within close proximity to your mineral area (East and West). You need to do some research in regards to the production figures on these wells as this will have a major impact on your bonus amounts. I would negotiate for no less than 20% royalty with a lease term no longer than 3 years. You also might want to add pugh clauses to your lease. I don't have the production figures on these wells mentioned above but someone with a NDIC subcription could look these up.
Eastern MT said:
The reported IP's have been modest in that area, with 150, 200, or 300 barrels per day being the general range. However, there are also several nearby wells yet to be reported. I can't provide the going lease rates but would agree with Mr. Mallory. If you want to lease keep it 3 yrs or less, ask for a 22% royalty (with 20% being the absolute floor), and definately lease your interests separately (ie... sign one lease for Section 26 and another one for Section 27), don't put all the interest on a single lease.
On my plat maps I show OXY already has a drilling permit on Section 27 NENW (with Sec 27 tied with Sec 34 as a 1,280 acre drilling unit). So if your minerals are open, and you wish to lease, contact OXY as soon as possible. I'd guess your net interest is rather small or they would have called you long before now.
The other companies which are active in your immediate area (142N 98W) is Continental Resources (CLR), and XTO (an Exxon subsidary). You should contact all three (OXY, CLR, & XTO) and offer your interest to each. Good Luck.
BAlanMichael said:
Dear Eastern MT:
Your information has been of great value to me. Same questions for you? Also, If my lease has expired, prior to drilling or production, I would assume, they cannot use the terms of my lease? Is this correct?
1. My lease is up 01/06/2013, Oxy has a well plan in the works and they intend to begin drilling in March/April. Do I negotiate a new lease now? Or will my current lease be in effect?
2. If I don't have a lease, what happens then? How do they determine my share of the production, if the well is a producer?
3. Is it better to have a lease or not have a lease, which is in my best interest?
Eastern MT said:The reported IP's have been modest in that area, with 150, 200, or 300 barrels per day being the general range. However, there are also several nearby wells yet to be reported. I can't provide the going lease rates but would agree with Mr. Mallory. If you want to lease keep it 3 yrs or less, ask for a 22% royalty (with 20% being the absolute floor), and definately lease your interests separately (ie... sign one lease for Section 26 and another one for Section 27), don't put all the interest on a single lease.
On my plat maps I show OXY already has a drilling permit on Section 27 NENW (with Sec 27 tied with Sec 34 as a 1,280 acre drilling unit). So if your minerals are open, and you wish to lease, contact OXY as soon as possible. I'd guess your net interest is rather small or they would have called you long before now.
The other companies which are active in your immediate area (142N 98W) is Continental Resources (CLR), and XTO (an Exxon subsidary). You should contact all three (OXY, CLR, & XTO) and offer your interest to each. Good Luck.
BAlan, The real question is; "Is your lease expiring on 1-6-13, or is it being held by OXY's preparatory work on their well scheduled for later this spring?" We can't answer that. You'd need to carefully read the precise wording of that existing lease to see what it allows. If you're new to this you may need proper legal opinion on the wording.
Some leases are written so broadly that merely one, or some, of the following can hold (or extend your lease); 1. filing for a drilling permit, or 2. constructing an access road to the site, or 3. building a drilling pad location. Other leases are more restrictive, or require more specific actions such as; 1. rig is onsite (before expiration), or 2. Rig has actually begun to spud (drilling), or 3. If an action was done to hold it prior to expiration, there must then be continuing operations (additional activity) within 60 days of that initial action. As you can see, there is no standard answer if your lease can be held. It all depends on what your lease states.
Your interest is calculated the same regardless of if you have a lease or not. If OXY has the 1,280 acre drilling unit, and you own 10 net acres (your interest is 0.78%), or you own 100 net acres (your interest is 7.8%), etc...
The difference is, without a lease, you are a working interest owner; 1. You're responsible for your % of the well expenses (the 0.78%, or 7.8% in my examples), and you'll receive that same percentage of oil & gas produced. If you have a lease, you'll receive whatever royalty rate you negotiated (say 20% royalty on your 7.8% interest, means you'll be paid 1.56% of the oil produced), but you're not responsible for any of the well expenses.