John:
You sound like you’re keeping up with Williams County. We have 20 mineral acres in one section and 17.5 in another. The description is Township 157N; Range 103W; Sections 29 and 31, both areas temporarily 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 attorney, I would 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 bet 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… then your offer of $2,800 sounds about right. Those are just the upfront bonuses, though.
What you really 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 more questions.