Hi All
I've never had this happen before so I am wondering if this has happened to other. We have our interest in Burke County -
SEC 2 +11, 160N, 92W
10A OF 240
SEC 2 - N1/2, SE1/4
SEC 11 - NE1/4
I received a lease proposal for $700 per acre and 3/16ths in May of this year. I thought that was good for Burke since I'd had nothing going on there for a while. After researching this lately it turns out that the
Mitbo Federal 6092 43-14H was spudded 12/12/12 and has production.
Now the
Oasis Petro 7/18/13 has also started production.
I am feeling taken in here and wondering what recourse there is.
And maybe a dumb question but when I sign for the first lease does that include any other drilling now that multiple wells are drilled on one pad? Should there be more compensation for multiple wells not that the business model has changed?
Thanks for all replies.
Rick, like a deal with the devil, they can't force you to sign, but once you do sign and they meet the absolute minimum requirements, which in ND do not even require that they actually pay you the bonus they enticed you to sign for, you are stuck, for however many wells for possibly 100 years or more. All you can do is read your lease and see what you will get. The worst possible thing is when they do not pay properly on a small leased parcel because you can't economically sue the lessee/operator, and they know it. Even if you did sue and win, they would still get 81.25% because the lease will stand. It is what it is.
Figured that but thank you for the answer.
Rick, I'm new to all of this myself. I just found out that they are producing oil in Burke county since April of 2012 where my family has mineral rights and we don't have a lease. I found the well last weekend by checking the ND site. On top of it the oil company is also putting a second well in another section (another spacing unit) and they contacted me with an offer to either participate in production costs, lease or not participate. We contacted the landman we have been using for the Mountrail mineral rights and he advised by email that he would prepare two leases. I've emailed the landman and asked why there would be two leases. The wells are in different spacing units so that might be the reason. The drilling company indicated that if the wells produce that they could put additional wells in that spacing unit.
My understanding is that once the land is leased the mineral rights owner would receive royalty payments for all wells but I guess that is something I will make sure is in writing.
Hope your situation works out for you.
Thanks for responding. Things are getting complicated in ND. I figured this has happened before. I guess you keep doing research and try to stay ahead. Two different spacing a does sound like two leases. Hope your getting 20% or more royalty. Especially if they are going to drill more wells. Thanks and good luck.
With 2 separate spacings, having a lease for each spacing acts as a natural pugh clause as long as there is not some strange language in the leases. 2 leases is a really good plan if you are going to lease.