I and my brother each have about 3.75 net acres under a well in McKenzie co N.D. that started producing in april 2008. It wasn’t a great well, but I believe it will be solidly economic. I think I was never contacted about this well because of some error. The well has produced over 80,000 barrels to date, the best 8 months (at least 40,000 barrels) before the crash of oil prices of 2009. I think it also qualified for a tax break on the first 75,000 barrels of oil also. As of February this year it was still producing 990 barrels of oil and 83 of water for 15 days production. Total water to date is 11,265 barrels It produces small amounts of gas which it looks like they flare more than they sell now but they have sold about 40,000 of the 75,000 MCF of gas produced. I have received no offers as stated above. I wonder how would one determine a fair lease offer on this existing well?
I should have mentioned that the spacing is 1280, and the well sits atop our mineral descriptions.
Are your lands under lease and if so, what is your lease royalty?
Thank you for replying Buddy. The direct answer is these approximately 3.75 acres each my brother and I have under this well are unleased. Perhaps you can enlighten me as you have so many times before. I’m not interested in selling but I wonder what my options really are?
you are protected by statute. You get 16% until costs are covered, then 100% after that. Get a lawyer.
Thank you, Mr. Kelsering. I am aware of the statutes. I am almost the poster boy for carried interest. On a different well that my brother and I both have an equal interest in, I executed a lease for which I was never paid that granted me a 19% royalty. In the same well my brother is carried with a 16% cost free royalty, and his check is larger than mine we are both being taxed at 28% because we will not supply our tax info. We are not cashing the checks until everything is straightened out I have lawyers working on getting that lease recinded right now.