Oil & gas discussion group for those interested in Hettinger County, ND. Share your experience regarding lease bonus, royalty rates, drilling activity, and oil & gas news.
Anyone have recent leases or lease offers in Hettinger County? I have an offer of $550 per acre with 1/6 royalty on three year lease with option to renew for another three years.
Anyone else have comments or figures?
I looked at the 8/2/11 auction results, but it shows the auction amounts as "bonus". Is the bonus amount indicativve of a lease/acre amount?
Life is Good,
Hi Bob, we have a lease offer from Sullivan Land Resources for Chesapeake Energy. The offer is $550/acre on a 3 year lease and 1/6 royalty. We should be able to do better on the bonus since at the August 2nd auction everything in Hettinger Co went for an average $988 bonus. We should be able to do better on the royalty as well, maybe around 1/5 royalty (20% instead of 16.67%). We are not rushing into a decision and are willing to wait for a better offer. We also have family in the leasing business (I just learned), so we may just have them do the negotiating.
I was just browsing and ran into this site. We have family owned mineral rights in southwest Hettinger County. We haven’t been contacted by anyone yet, so the activity musn’t be there yet. I’ll be checking in occasionally, so would appreciate any comments about activity in Hettinger county.
Activity in Hettinger County is concentrated in the NW six townships. Some folks ‘in the know’ are saying the oil play is nearing the southern edge and there won’t be much beyond that. Others are saying there will be oil play down into South Dakota.
New to this forum but interested in hearing more about this area in general. Father-in-law leased his mineral rights to 320 acres in 136N-96W-section 17 earlier this summer for $500/acre and 1/6 rights for 3 years with optional 2 after that. In seeing what leases are bringing now, makes me think he could have done better. The "play" is interesting because he was recently contacted by the lessor to provide additional information about the line of survivorship to the property. Do they do this prior to them planning to drill or am I getting excited over nothing?
I am also curious as to the "edges" of the overall oil and gas area in ND. On looking at the map of the Bakkan area, our county in contained within it, but there seems to be limited drilling activity in the area and I am curious as to why they would be interested in leasing our mineral rights.
TALLMAC: I have been told the Bakken only loops down into Hettinger County - about to Regent - and that much of that strata will be too thin to produce. The real interest seems to be in the Three Forks and Tyler formations. (Of course, the folks telling me this are the ones who told me we would never see leases over $250/acre - 1/8 royalty). The interest is apparently created by Chesapeake Oil, who has received a directive from its stockholders to get into the ND oil play. As to the line of survivorship question - it seems to me that the current leasing process is somewhat backwards - the leasing companies get signed leases first, and then before they pay out, they research the mineral ownership. There is a well staked about 5-6 miles south of your property - rumor has it they plan on drilling before the end of the year, but oil field rumors are notorious for being wrong.
Ron, that 3 year lease for $550/acre with a renewal option might be worth $900+/acre, if the renewal option is exercised. I think the bonuses on the auctions were for 5 year leases. Seems like it’s best to compare 5 year lease with 5 year lease, isn’t it?
Ron (good name).
You're probably right....compare apples to apples. I think a bonus of $900/acre is probably about what the market can bare now. We'll exclude the renewal clause though. Why give away a renewal under the same terms and conditions, right?
I got a call (voice mail) regarding my mineral rights from Chesapeake that I have in Hettinger County. Her voice had such a drawl that I couldn't really understand her. When I returned the call, I told her right off I had a lawyer in Dickenson that worked with me on my leases in Stark County and she immediately hung up. Interesting isn't it!!
Kevin, a very interesting article and well worth the read. Kudos to you for practicing good ethics. Chesapeake's practices are very questionable.
Based on my recent experience with Sullivan Land/Chesapeake, they will not negotiate anything at all in terms of leases on minerals. We have some mineral rights to lease in Hettinger County and are interested in dealing with a reputable firm on a lease.
My family all executed a lease with Sullivan for rights in Hettinger County with a supposed payment coming in January. Last week we received an email from the person we were dealing with the following excerpt "
"our project was just put on hold and all of us were laid off. I am uncertian as to the reason as no infromation has been forthcoming from Cheapeak. Accordingly it appears that chesapeak will not be interested in leasing your minerals at this time" I suppose the next step is to see if they have recorded anything. I did not start reading these posts until that email. What an education! If anyone has any other advise, we would sure appreciate it.
Ms. smith, did you give them an executed lease before they backed out ? If so they may have recorded it and you will have to ask them to release it if they did. If you have a lease recorded you will likely not receive future lease offers. Sullivan/chesapeake may use it as an unpaid option and try to pick it up in the future if the value of your minerals doubles in the next few years. I would find out now if your lease was recorded. Quick action on this could save you alot of money down the road.
Now is the time to get the U.S. Attorney General involved, as well as any national media that will print the truth, to put a stop to this increasingly common practice by the Chesapeake and RedSky Land COWARDS!
A few random thoughts. As background I own and lease my own farmland as well as that of other family members and have done so since late 1970's.
I have always accepted drafts and I have never had a problem. I completed a lease in Hettinger as well as Slope in 2011 with no problems. I am guessing I am between 12-15 leases over the years.
I have never had a lease recorded prior to the draft being paid. Some would say I am lucky and that may be. I like to think because of my efforts to network I have been fortunate to work with professionals who have earned the trust of some long time locals over many years.
My 2011 leases both were for 3 years with a 2 year option. I have read the arguments against and if I were in a very hot area I might feel I had more power. I was very happy with the lease bonus as based on what I have read here for both Hettinger and Slope I have no reason to complain. I would go as far to say if I had to accept the 3 year amount for 5 years I would have done it. If I have to settle for the same bonus for 2 years more I will not complain I will be thrilled. In my opinion I seriously doubt we will be seeing much activity in our areas before then. I will go as far to say I doubt there will be activity within 5 years which will put me back in a position to take advantage of the market as real activity nears our region. I have seen many times over my 30+ years where landowners that I know without leverage (hot area) have held out only to receive nothing. In each case in 2011 after the successful completion (money in the bank) of each lease I asked the landman involved in each lease if they wanted me to give them a recommendation in the Forum. Both stated they preferred to work by referral and they were very busy. Out of respect for the outstanding service I am respecting their wishes and not giving their contact information or terms. As I have seen in the past I know of landowners who were in negotiations in 2011 and held out for terms that caused the same companies that I leased with to walk away. I also know of some on the leasing side that over stated their relationships with Major companies and backed out of deals they could not broker.
I do not expect to be very active. I am sure there are some who will take exception to the approach I have taken and that is fine. I close with this. Long ago I learned that in real estate you can be a block away from success. In Oil and Gas lease in my opinion not only can you be a township away but just a section away from success. If you don't have or can not get the local knowledge which takes a long time to build I do agree that you should hire a professional. I do not know but I have looked at his sight and his fee schedule and read many of his posts and I would not hesitate to contact Buddy Cotten should the need arise. Best of luck to all.
Mr. Carlson, if I may ask, how many acres are you leasing ? I feel that if you have a large amount of acres it may be in your best interest to have them leased, especially if they do not get drilled. This may not be the case if you only have only 5 to 10 net acres. I think at some point on the bottom end, the mineral owner has to decide if it's too little to be worth their time, or to risk missing out on better offers that may come in the near future. It's not one size fits all.
Mr. Kennedy, you are 100% correct. My positions are large and your assumption is right on target. Based on the most recent developments with some pulling out and many pulling back from leasing I feel very lucky I was able to take advantage of the offers last summer as it appears at least for the near term that was a peak for leasing in both Hettinger and Slope.