Hello, I own 160 acres of mineral rights in Divide County, ND. The description is 161 North, Range 99 West of the 5th P.M. Section 17: NW 1/4. I have a five year "Paid Up" lease with Diamond Resources that will expire first of August of this year. The specifies 160 gross acres/80 Net Acres. I received a check for the five year lease for $28,000. My royalty was to be 17%. Does anyone know if there has been activity in my area and if I am likely to get an offer to renew my lease? And, secondly, was my original lease fair at the time I took it out? Thank you.
Cynthia:
There are producing Bakken wells within a few miles of you in all directions. Unfortunately, this part of Divide County has not produced the quality wells found elsewhere in the Bakken play. The wells in your area are only projected to recover 100,000 - 200,000 bbls of oil each, which at current oil prices simply doesn't make economic sense to drill. That being said, I would expect that someone will try to lease you again before long.
Your previous lease of $350/acre for five years might have been a little light, but this area simply won't command the huge lease payments that the more prolific areas will bring. If you don't need the extra cash right now, you might consider a shorter lease this time, maybe only three years. That way it puts more pressure on the Company to drill you first when prices recover.
Good luck.
Thanks, Steve. I appreciate your information.
Steve Durrett said:
Cynthia:
There are producing Bakken wells within a few miles of you in all directions. Unfortunately, this part of Divide County has not produced the quality wells found elsewhere in the Bakken play. The wells in your area are only projected to recover 100,000 - 200,000 bbls of oil each, which at current oil prices simply doesn't make economic sense to drill. That being said, I would expect that someone will try to lease you again before long.
Your previous lease of $350/acre for five years might have been a little light, but this area simply won't command the huge lease payments that the more prolific areas will bring. If you don't need the extra cash right now, you might consider a shorter lease this time, maybe only three years. That way it puts more pressure on the Company to drill you first when prices recover.
Good luck.