Blanca Peak LLC--What's going on?

North Dakota Mineral Rights Billings County, ND
1

Hi,

Back in January of 2011 we did lease our mineral rights to Blanca Peak. We went through all the paper work and we did receive a bonus check. So, we were happy about that. Today, I thought I'd call them and see if there was any drilling going on. I stumbled across this discussion group and was a little concerned about what I read. I also read that Chesapeake

possibly was the owner of Blanca and they have begun to drill. This gets confusing.

Does anybody out there know what's happening? Maybe I need to contact Chesapeake.

We do have a contract with Blanca until January 2014. I'd appreciate any input.

Thanks.

2

Wendy,

As far as I can tell, you're fortunate to have only signed a 3 yr lease instead of 5 yr. Blanca Peak was leasing on behalf of Chesapeake, they did assignment of leases to Chesapeake after getting the leases signed.

Chesapeake drilled 8 wells in fall of 2011, 7 in Stark county, 1 in Golden Valley county. Only 2 had production, to the best of my knowledge, and very poor production at that. They basically pulled out of ND, but still retain those leases. Of the additional permits they'd taken out, I'm guessing they've all expired and been cancelled, with nothing new permitted since.

It's a guess as to when/if they will come back to try again, or if they're looking to find a buyer of the leases. With the poor results they got from drilling, it'll be a tough sell, unless they take a loss.

Towards the end of this year, you might get some other company showing interest in leasing you, once your Blanca Peak lease expires. If Blanca Peak/Chesapeake would contact you to toplease or extend your lease, I would be very cautious.

3

Hi,

Thanks for your information and input. I am so glad I found this site. We knew nothing about mineral rites

or what to do with them. blanca's offer was good so we figured, why not? This site gives great information

on what to do if you are leasing etc. I figured that somebody would be calling or writing in the next 6 months.

We will be better educated by then. If you hear anything more please send it on.

Again, thanks for your quick response.

Snues said:

Wendy,

As far as I can tell, you're fortunate to have only signed a 3 yr lease instead of 5 yr. Blanca Peak was leasing on behalf of Chesapeake, they did assignment of leases to Chesapeake after getting the leases signed.

Chesapeake drilled 8 wells in fall of 2011, 7 in Stark county, 1 in Golden Valley county. Only 2 had production, to the best of my knowledge, and very poor production at that. They basically pulled out of ND, but still retain those leases. Of the additional permits they'd taken out, I'm guessing they've all expired and been cancelled, with nothing new permitted since.

It's a guess as to when/if they will come back to try again, or if they're looking to find a buyer of the leases. With the poor results they got from drilling, it'll be a tough sell, unless they take a loss.

Towards the end of this year, you might get some other company showing interest in leasing you, once your Blanca Peak lease expires. If Blanca Peak/Chesapeake would contact you to toplease or extend your lease, I would be very cautious.

4

Wendy,

you are a lucky one to have received your signing bonus from Blanca Peak. Blanca Peak is a Chesapeake Energy shell company. It sounds like you have, but be sure you use the search function and type in Blanca Peak. There is a lot of distressing reading as you have probably discovered about Blanca, CHK and the area of ND where they were active.

As I recall, there were many leases in ND that were not honored by CHK et al (their shell companies). I experienced a similar thing in MI where companies leased on CHK behalf and then canceled for bogus reasons. I think there were lawsuits filed by landowners in ND against CHK et al. I know there were lawsuits in Michigan against CHK.

In your case, you luckily were paid your sign bonus which activitated the lease agreement. So as you note you are under lease with CHK (via Blanca) until 2014. I suspect there is a renewal/extension clause in the lease, but from what I understand, it is very unlikely that it will be renewed where you are located.

Seems I recall articles from ND that indicated CHK had pulled out of ND (that region anyway) and that activity in that particular area basically ceased. I may be wrong, you'll have to peruse the old posts regarding blanca and the appropriate ND county postings.

In the meantime, you might as well, spend some time on this site reading and learning about strong lease agreements; because you will never be handed a "good" lease from a gas/oil company or the landmen that come knocking. There is so much more than the signing bonus.

Good luck and I hope companies do come knocking and you'll have more opportunity in the future.

wilson

5

While helping my friend Wes Luke look into activity on his interests, one of which was a lease with Blanka Peake/CHK, I noticed that his well that was drilled in early 2011 and never completed, had the well survey done just two months ago. I found it in the well logs. Possibly CHK is not done in ND. People assumed that CHK walked away because there was no oil, I think it's possible that because of the financial straits the company was in that they may not have had budget for projects that didn't have a prospect of immediate return. Wells that would not pay out for 5 years or longer would, I think not be at the head of their list of things to do.

6


Hi,

Like I told Wilson, who also replied. Let's just keep our fingers crossed. Maybe we'll get lucky.

I did see that somebody posted in January about possible new interest in the area. Who knows.

I think my mom and dad bought these rights in the late 1950's or 60's. They are both gone now. I'm sure

they'd get a great chuckle if anything ever paid off.
r w kennedy said:

While helping my friend Wes Luke look into activity on his interests, one of which was a lease with Blanka Peake/CHK, I noticed that his well that was drilled in early 2011 and never completed, had the well survey done just two months ago. I found it in the well logs. Possibly CHK is not done in ND. People assumed that CHK walked away because there was no oil, I think it's possible that because of the financial straits the company was in that they may not have had budget for projects that didn't have a prospect of immediate return. Wells that would not pay out for 5 years or longer would, I think not be at the head of their list of things to do.

7

Hi Wilson,

I replied to you once but I guess I forgot to click on add reply. Thanks for the input. I guess I'll have to see what

happens toward the end of 2013. Maybe somebody will call and want to lease the rights. I am going to educate

myself so I'm prepared. We had several groups call. The fellow from Blanca sounded like a really nice person.

Maybe a wolf in sheeps clothing? I really want to purchase a condo in Florida. LOL. I think my chances here might be better than the lottery. One can only hope.

Wilsontownship said:

Wendy,

you are a lucky one to have received your signing bonus from Blanca Peak. Blanca Peak is a Chesapeake Energy shell company. It sounds like you have, but be sure you use the search function and type in Blanca Peak. There is a lot of distressing reading as you have probably discovered about Blanca, CHK and the area of ND where they were active.

As I recall, there were many leases in ND that were not honored by CHK et al (their shell companies). I experienced a similar thing in MI where companies leased on CHK behalf and then canceled for bogus reasons. I think there were lawsuits filed by landowners in ND against CHK et al. I know there were lawsuits in Michigan against CHK.

In your case, you luckily were paid your sign bonus which activitated the lease agreement. So as you note you are under lease with CHK (via Blanca) until 2014. I suspect there is a renewal/extension clause in the lease, but from what I understand, it is very unlikely that it will be renewed where you are located.

Seems I recall articles from ND that indicated CHK had pulled out of ND (that region anyway) and that activity in that particular area basically ceased. I may be wrong, you'll have to peruse the old posts regarding blanca and the appropriate ND county postings.

In the meantime, you might as well, spend some time on this site reading and learning about strong lease agreements; because you will never be handed a "good" lease from a gas/oil company or the landmen that come knocking. There is so much more than the signing bonus.

Good luck and I hope companies do come knocking and you'll have more opportunity in the future.

wilson

8

Hi Wendy,

I was checking ndrin and found your lease and location. I then checked your location with the GIS map in ndic and found there is a permit to drill with Whiting. If this gets drilled, it will hold your lease with Chesapeake. Your lease does have an optional 3 year extention clause. I didn't see any exhibit A or where they changed the royalty from 1/8.

Bad news with the good news, sorry. Whiting does a pretty decent job of drilling.

NDIC File No: 23575 API No: 33-007-01753-00-00 County: BILLINGS
Well Type: OG Well Status: LOC Status Date: 8/21/2012 Wellbore type: HORIZONTAL
Location: NENW 26-139-100 Footages: 300 FNL 1510 FWL Latitude: 46.831774 Longitude: -103.266949

Current Operator: WHITING OIL AND GAS CORPORATION
Original Operator: WHITING OIL AND GAS CORPORATION
Current Well Name: ADAMS 21-26PH
Original Well Name: ADAMS 21-26PH
Elevation(s): 2677 GL Total Depth: Field: NORWEGIAN CREEK
Completion Data
Pool: BAKKEN Status: LOC Status Dt: 8/21/2012

9

Hi Snues,

Well I can see the good news but what's the bad news??? Lost me here. If they find oil we'll get something I hope? Explain the bad news??

Thanks,

Wendy

Snues said:

Hi Wendy,

I was checking ndrin and found your lease and location. I then checked your location with the GIS map in ndic and found there is a permit to drill with Whiting. If this gets drilled, it will hold your lease with Chesapeake. Your lease does have an optional 3 year extention clause. I didn't see any exhibit A or where they changed the royalty from 1/8.

Bad news with the good news, sorry. Whiting does a pretty decent job of drilling.

NDIC File No: 23575 API No: 33-007-01753-00-00 County: BILLINGS
Well Type: OG Well Status: LOC Status Date: 8/21/2012 Wellbore type: HORIZONTAL
Location: NENW 26-139-100 Footages: 300 FNL 1510 FWL Latitude: 46.831774 Longitude: -103.266949

Current Operator: WHITING OIL AND GAS CORPORATION
Original Operator: WHITING OIL AND GAS CORPORATION
Current Well Name: ADAMS 21-26PH
Original Well Name: ADAMS 21-26PH
Elevation(s): 2677 GL Total Depth: Field: NORWEGIAN CREEK
Completion Data
Pool: BAKKEN Status: LOC Status Dt: 8/21/2012

10

Hi Wendy,

Sorry to have worded it that way. The bad news would be that your royalty rate is 1/8. That's 12.5%, which is very low, for most any leasing in recent years. There are others that sign at that rate also. The bad news of that, there is no way to do-over, or re-negotiate. The average life of a bakken well is 35 years, so over the course of that time, the % difference would add up.

You should have been offered approximately 3/16 to 1/5th. The 1/8 royalty is the rate you will be paid for the life of the well, and others if more are drilled.

11

OK, so what happens after the 3 year extension? Will they try to renegotiate the lease and the we can try and get more?

Snues said:

Hi Wendy,

Sorry to have worded it that way. The bad news would be that your royalty rate is 1/8. That's 12.5%, which is very low, for most any leasing in recent years. There are others that sign at that rate also. The bad news of that, there is no way to do-over, or re-negotiate. The average life of a bakken well is 35 years, so over the course of that time, the % difference would add up.

You should have been offered approximately 3/16 to 1/5th. The 1/8 royalty is the rate you will be paid for the life of the well, and others if more are drilled.

12

Also, if they are doing horizontal drilling how do you know whose property the oil was found on. Does everybody whose property the pipes run through get something? Also, how do we even check to see if

they find anything? Are they honest enough to let you know or do you have to watch and pursue it.

Wendy Maas said:

OK, so what happens after the 3 year extension? Will they try to renegotiate the lease and the we can try and get more?

Snues said:

Hi Wendy,

Sorry to have worded it that way. The bad news would be that your royalty rate is 1/8. That's 12.5%, which is very low, for most any leasing in recent years. There are others that sign at that rate also. The bad news of that, there is no way to do-over, or re-negotiate. The average life of a bakken well is 35 years, so over the course of that time, the % difference would add up.

You should have been offered approximately 3/16 to 1/5th. The 1/8 royalty is the rate you will be paid for the life of the well, and others if more are drilled.

13

Hi Wendy,

To check on the location for wells, one way is to go to NDIC, click on the "GIS map server", and then click "find section". Then put in your mineral descriptions. Township 139, Range 100, Section 26. It will show you a blank circle with a #23575 by it. That is the projected well site. With a basic subscription to the NDIC, I was able to look up on the scout ticket data, which showed it would be a horizontal from section 26 down into section 35. Anyone within those 2 sections will be paid their share of the production, according to the number of net mineral acres they own, and for the royalty amount the lease was signed for. It comes as a division order number, and that's the rate you will forever be paid at for the life of the well.

If this well gets drilled prior to Jan 2014 expiration of your current lease, and produces oil, Blanca Peak will not be extending your lease, no more bonus or negotiation will happen, as your mineral acres will be held by production. However, other wells could be drilled within your same acreage in the future, and you'd get the same division order amount of the production of that well or wells. That may happen if the production from the first well, is outstanding. Let me better explain Blanca Peak not extending your lease. It means they hold the your lease for the life of the well, but they won't need to pay an extention, because the oil production holds it in their name until it no longer produces, or all future well productions. Basically said, they'll own it for 30+ years and they never have to pay you anything more than the oil it produces, using your division order #.

As far as watching production #'s once the well is drilled, it's suggested. Not all oil companies can be trusted (according to many posts among this Mineral Rights Forum) so you should keep an eye on it. There is no rig currently drilling on the site, and when a rig moves on, they typically post it as Confidential, so the amount of production usually isn't posted for up to 6 months. If oil is sold prior to the 6 months, the amount sold gets posted as "oil runs", but that might not be the total amount produced each month. Eventually, that extra oil gets sold and you're suppose to be paid on all of it as its sold.

It will be fun for you to see those checks coming in monthly, once it all happens. A typical Bakken well starts out producing at its highest amount, then declines by quite a bit within the first year.

Something more to add; even though the lease was signed with Blanca Peak, they did assignment of leases with Chesapeake Oil, however, it's permitted with Whiting Oil. As to who will pay you the royalty amounts, I am unsure. I'd guess Whiting, but someone with royalty payments, would know for sure.

14

You are certainly a store house of information. Are you an oil company person yourself? I really appreciate the clear explanation you have been giving me. I have been passing these on to my brother and sister also. After all, what do we know? It certainly is fun to think that something our parents did years ago might pay us something. Hey, even if it's $50 a month it would be fun. It's kind of like winning the lottery----not as much of a pay off but our chances might be a little better here. Thanks again for you input.

Snues said:

Hi Wendy,

To check on the location for wells, one way is to go to NDIC, click on the "GIS map server", and then click "find section". Then put in your mineral descriptions. Township 139, Range 100, Section 26. It will show you a blank circle with a #23575 by it. That is the projected well site. With a basic subscription to the NDIC, I was able to look up on the scout ticket data, which showed it would be a horizontal from section 26 down into section 35. Anyone within those 2 sections will be paid their share of the production, according to the number of net mineral acres they own, and for the royalty amount the lease was signed for. It comes as a division order number, and that's the rate you will forever be paid at for the life of the well.

If this well gets drilled prior to Jan 2014 expiration of your current lease, and produces oil, Blanca Peak will not be extending your lease, no more bonus or negotiation will happen, as your mineral acres will be held by production. However, other wells could be drilled within your same acreage in the future, and you'd get the same division order amount of the production of that well or wells. That may happen if the production from the first well, is outstanding. Let me better explain Blanca Peak not extending your lease. It means they hold the your lease for the life of the well, but they won't need to pay an extention, because the oil production holds it in their name until it no longer produces, or all future well productions. Basically said, they'll own it for 30+ years and they never have to pay you anything more than the oil it produces, using your division order #.

As far as watching production #'s once the well is drilled, it's suggested. Not all oil companies can be trusted (according to many posts among this Mineral Rights Forum) so you should keep an eye on it. There is no rig currently drilling on the site, and when a rig moves on, they typically post it as Confidential, so the amount of production usually isn't posted for up to 6 months. If oil is sold prior to the 6 months, the amount sold gets posted as "oil runs", but that might not be the total amount produced each month. Eventually, that extra oil gets sold and you're suppose to be paid on all of it as its sold.

It will be fun for you to see those checks coming in monthly, once it all happens. A typical Bakken well starts out producing at its highest amount, then declines by quite a bit within the first year.

Something more to add; even though the lease was signed with Blanca Peak, they did assignment of leases with Chesapeake Oil, however, it's permitted with Whiting Oil. As to who will pay you the royalty amounts, I am unsure. I'd guess Whiting, but someone with royalty payments, would know for sure.

15
Reply by Wendy Maas on Tuesday

I am so glad I found this site. We knew nothing about mineral rites or what to do with them. This site gives great information on what to do if you are leasing etc. We will be better educated by then.

Hi Wendy, No, I am not an oil company person. The above portion of your message is where I felt a connection, those could have been my words about 2 years ago. Now, I enjoy helping others with questions I had. I still have a lot to learn about minerals, and plan to keep learning. Our family still hasn't gotten a well in all the years. I will backtrack on that, in 1966 there was a dry hole drilled on hubby's grandparents homestead. I can only imagine the thrill it will be to walk out to the mail box and see a check in there, for whatever amount each month, when the time comes. Over the years we had doubts there'd ever be oil found. Would be nice to see it in our lifetime.

My husband has owned a piece of "family" minerals since the early 90's. Initially an uncle took the lead and dealt with the landsmen, and we'd all sign the lease that showed up. After the uncle passed away, the next 2 rounds of leases seemed like a rip off in comparison to previous leases. With all the hype of the Bakken, we just knew we'd need to learn more about it, prior to the 2011 leasing. Each term had been for 5 years, as we'd thought that was standard. Also, 15% royalty had been the standard on the previous leases.

Once I found this website, I learned there really is no standard, only what a landsmen tries to sign people at, is in their best interest, not the mineral owner. The Beverly Hillbilly story isn't how it all goes down, instant wealth, at least in most cases. Fun to dream the dream. Of course there are mineral owners that become millionaires just with the leasing process, if they own a huge amount of net minerals.

Keep reading these forum, ask tons of questions, and learn everything you can. It's quite a legacy that can be passed down forever to all generations. When a person leases, its great to get as good of terms that you can, for the future.

Susan

16

thanks Susan,

I will keep reading. You have given us an avenue to follow and it's a great start. We'll just keep our fingers crossed and see what happens.

Wendy

Snues said:

Reply by Wendy Maas on Tuesday

I am so glad I found this site. We knew nothing about mineral rites or what to do with them. This site gives great information on what to do if you are leasing etc. We will be better educated by then.

Hi Wendy, No, I am not an oil company person. The above portion of your message is where I felt a connection, those could have been my words about 2 years ago. Now, I enjoy helping others with questions I had. I still have a lot to learn about minerals, and plan to keep learning. Our family still hasn't gotten a well in all the years. I will backtrack on that, in 1966 there was a dry hole drilled on hubby's grandparents homestead. I can only imagine the thrill it will be to walk out to the mail box and see a check in there, for whatever amount each month, when the time comes. Over the years we had doubts there'd ever be oil found. Would be nice to see it in our lifetime.

My husband has owned a piece of "family" minerals since the early 90's. Initially an uncle took the lead and dealt with the landsmen, and we'd all sign the lease that showed up. After the uncle passed away, the next 2 rounds of leases seemed like a rip off in comparison to previous leases. With all the hype of the Bakken, we just knew we'd need to learn more about it, prior to the 2011 leasing. Each term had been for 5 years, as we'd thought that was standard. Also, 15% royalty had been the standard on the previous leases.

Once I found this website, I learned there really is no standard, only what a landsmen tries to sign people at, is in their best interest, not the mineral owner. The Beverly Hillbilly story isn't how it all goes down, instant wealth, at least in most cases. Fun to dream the dream. Of course there are mineral owners that become millionaires just with the leasing process, if they own a huge amount of net minerals.

Keep reading these forum, ask tons of questions, and learn everything you can. It's quite a legacy that can be passed down forever to all generations. When a person leases, its great to get as good of terms that you can, for the future.

Susan