Hello,
My two brothers and I have recently been informed that we are sole heirs to mineral rights in Williams County and Burke County from our long deceased aunt and uncle, who had no families, just us. We knew there were mineral rights, but thought they had long ago been sold. We were approached by a land broker who offered us $2,800.00 for 8 acres and we didn't take it and now have a mineral rights attorney.
My family and I are all new to this and realize the attorney will try and answer all our questions in general as he does not work with the oil companies. We want to know what with the increased interest in this area, once we know we are the legal heirs, do we then skip a middle man and negotiate the best deal insofar as leasing? Any of you out there becoming rich? Jst wondering as we having friends and relatives giving us advice that we realize they don't have the expertise to back up...well meaning friends I guess.
This blog is fantastic as have been searching for something like this for several months now.
The Ohman family
First of all , I will be brutally honest , the lawyer already charged you for advice , so you did this backwards , and assume his advice is good . You are probably stuck for more legal fees than lease is worth
Leslie,
We actually have not paid him anything yet…he was recommended by the ND Supreme Court in mineral rights law. We already have been offered money by two different land brokers, so know they are on the low end as they want total rights to everything; an attorney I work with recommended we seek advice from a good mineral rights attorney before we do anything and we have not done anything yet. I think we are on the right path, are being conservative, and weighing all our options before proceeding. Several of our neighbors already cashed checks from land brokers as they were unaware they would lose any future rights to the mineral rights.
Thanks for your input.
Ohmans
Leslie Elm said:
First of all , I will be brutally honest , the lawyer already charged you for advice , so you did this backwards , and assume his advice is good . You are probably stuck for more legal fees than lease is worth
Regarding your neighbors: If they leased the mineral acres then the lease is as long as they agreed unless there is something happenig on the spacing unit. If they sold the rights, then that’s it. In other words, they have not lost all future rights to their minerals if leased. If the company never drills then they will most likely be able to lease again if there is any interest in the acreage.
Your royalty interest will probably be or somewhere close to .0011718 / 3 = .0003906 based on 8 acres 1280 spacing 3/16 royalty and 3 people. This would not be considered a huge interest.
Hello Pat,
That is good that you all are being conservative and thoroughly thinking this through. As for the attourney, I wuold probably just skip him/her if I were you--I know a lot of people have opted for the lawyer route and it all just depends on the lawyer, if he or she actually knows what they are talking about, then great (but I am willing to be you would be able to find the info you want to know on here for a lot cheaper). I work for an oil company and I am relatively new to this blog, but it seems that a lot of the people on here (for the most part) have relevant and useful information.
Now, as per your lease offer. It all depends on where the 8 acres are located...Your acreage in Williams county would be a lot more than your acreage in Burke county (because Williams county is really the "hot spot" for oil and Burke is more so a gamble). If the 8 acres you own is all in Williams, $2,800 is short about $3,000. You should be getting at least $500/acre in Williams and that is on the low side. However, if they are all 8 in Burke county...than your offer of $2,800 sounds about right. Those are just the upfront bonuses, though.
What yo ureally want to be concerned with is the royalty percentage (the percent of the oil coming out of a well that you would own). The best royalty percentage in ND is 20% (the drilling companies ALWAYS take 80% or it would not be cost effective for them to lay these million dollar rigs down on lands). The remaining 20% is up for the actual mineral owners and the leasing companies to negotiate on. Usually a 3/16 royalty or 18.75% royalty is really good.
Hoped this helped a little bit, let me know if you have mroe questions
John:
You sound like your'e keeping up with Williams County. We have 20 mineral acres in one section and 17,5 in another. The description is T157N;R103W; Sections 29 and 31, both areas temp. spaced by G-3 Operating. Seems the drilling activity is currently to the East of this area as we are near the Montana border. What are you hearing, if anything, about this particular area?
John Bender said:
Hello Pat,
That is good that you all are being conservative and thoroughly thinking this through. As for the attourney, I wuold probably just skip him/her if I were you--I know a lot of people have opted for the lawyer route and it all just depends on the lawyer, if he or she actually knows what they are talking about, then great (but I am willing to be you would be able to find the info you want to know on here for a lot cheaper). I work for an oil company and I am relatively new to this blog, but it seems that a lot of the people on here (for the most part) have relevant and useful information.
Now, as per your lease offer. It all depends on where the 8 acres are located...Your acreage in Williams county would be a lot more than your acreage in Burke county (because Williams county is really the "hot spot" for oil and Burke is more so a gamble). If the 8 acres you own is all in Williams, $2,800 is short about $3,000. You should be getting at least $500/acre in Williams and that is on the low side. However, if they are all 8 in Burke county...than your offer of $2,800 sounds about right. Those are just the upfront bonuses, though.
What yo ureally want to be concerned with is the royalty percentage (the percent of the oil coming out of a well that you would own). The best royalty percentage in ND is 20% (the drilling companies ALWAYS take 80% or it would not be cost effective for them to lay these million dollar rigs down on lands). The remaining 20% is up for the actual mineral owners and the leasing companies to negotiate on. Usually a 3/16 royalty or 18.75% royalty is really good.
Hoped this helped a little bit, let me know if you have mroe questions
Hi Charles,
It looks like your interests are still in a good area even though most of the drilling is happening east of you--There was a well drilled fairly close to your lands in 1964 that came up dry, but there was one drilled in 2010 below your lands in section 34 that is Active. I am not sure if you know, but there is an informational website just for mineral interests/oil & gas in North Dakota: https://www.dmr.nd.gov/oilgas/ Here you can type in your legals and see exactly where your lands are--what wells have been drilled around them and etc.
I am not sure if you have had lease offers yet, but anything in Williams is considered good so be sure you are getting a decent deal--don't sell.
John:
Thanks for the info. I have utilized that website in the past and I keep a close eye on the activity in the area. The well you are referring to in Section 34 is an Oasis well and is a good one from what I have heard. I was not aware that a dry hole was drilled in 1964, but today is a whole new game, new zone, new technology. The leases expire in 2012 and actually, we would be better off if a new lease could be negotiated as the bonus and % royalty is much much greater than in 2008.
John Bender said:
Hi Charles,
It looks like your interests are still in a good area even though most of the drilling is happening east of you--There was a well drilled fairly close to your lands in 1964 that came up dry, but there was one drilled in 2010 below your lands in section 34 that is Active. I am not sure if you know, but there is an informational website just for mineral interests/oil & gas in North Dakota: https://www.dmr.nd.gov/oilgas/ Here you can type in your legals and see exactly where your lands are--what wells have been drilled around them and etc.
I am not sure if you have had lease offers yet, but anything in Williams is considered good so be sure you are getting a decent deal--don't sell.
Yeah I definitely think you should increase royalty percnt as well as the upfront bonus, also ask for a three year term with no option of extension. I am not sure of the company you leased with, but some utilize a two year extension clause so your 3 year lease becomes a 5 year lease should the lessee wish it. Good luck on getting the best offer you can, you are in a good area!
charles s mallory said:
John:
Thanks for the info. I have utilized that website in the past and I keep a close eye on the activity in the area. The well you are referring to in Section 34 is an Oasis well and is a good one from what I have heard. I was not aware that a dry hole was drilled in 1964, but today is a whole new game, new zone, new technology. The leases expire in 2012 and actually, we would be better off if a new lease could be negotiated as the bonus and % royalty is much much greater than in 2008.
John Bender said:
Hi Charles,
It looks like your interests are still in a good area even though most of the drilling is happening east of you--There was a well drilled fairly close to your lands in 1964 that came up dry, but there was one drilled in 2010 below your lands in section 34 that is Active. I am not sure if you know, but there is an informational website just for mineral interests/oil & gas in North Dakota: https://www.dmr.nd.gov/oilgas/ Here you can type in your legals and see exactly where your lands are--what wells have been drilled around them and etc.
I am not sure if you have had lease offers yet, but anything in Williams is considered good so be sure you are getting a decent deal--don't sell.