Lease Offer

My family holds the mineral rights to W2, Sec 17, 158N, 97W in William County, ND. Our 3 years lease with Continental expired in September. They are now offering $500/ Acre for 4 years and 17.5% with the option of a 5th year at $250/acres. In the present oil economy is this a reasonable offer?

I personally would counter at $1500/ac and 22.5%, and hope to settle at $1,000/ac and 20%. This isn't considered core, and ND is getting hammered. For example, I'm getting $32-33 a barrel in Williams Co for oil now.

So, that's my opinion on a fair lease price in Sec 17, with 3 option.


You may be on the wrong track. Continental is not looking at the the present oil economy and perhaps you shouldn't either when you decide what you want rather than expect. If you truly have the NMA you indicated, you are in a great position to make both your family and Continental very happy. I don't think owners should believe that lease rates come from a retail type price setting by the lessee. Each property is unique as to size and location to think of Continental's transaction costs and figure out what they really want for the company's business plan.

The land grab for exploration is over. Now the surviving companies are in a long term development mode (think manufacturing) and you, lucky you, have the raw material needed for the long term plan. As always, the mineral owner will suffer if he doesn't pay attention to the details of a lease. The devil is in the details and the larger your NMA the bigger the devil will be. (Read some of the posts of the folks in MRF who didn't bother to understand the lease terms past bonus and royalty rates) Get some help understanding the lessee position in the demand for your supply less you just want to see what you can get without regard to what is fair to your family.

$1500/ Acre, 3 year, 20%

Thank you. This is why this Blog site is so valuable. Our previous lease was $1,500/ Acre, 3 year and 20%.

Thank you for your input.


If you are going to lease (do some research on working interest far better deal ) only a three year with at least 22% and $1500 per acre with only 120 day Plugh clause. Also never lease all your land at one time, only do a spacing unit size per lease. So if you lease now for $1500 only 160 acre space and not the rest at this time. Then when price goes up you can lease other spacing unit size only for another bonus check later. The offer was very low for that area. Now would not be a good time to lease and drill, why extract for $36.00 per barrel (Bakken sweet price) when it can stay in the ground later until prices go up and then extract for much more per barrel.
Remember once they drill all the lands on the lease are tied to that lease forever.