Lease OFFERS, 151N-97W, Mckenzie Co., ND

I received an offer of $1,250/acre with 1/5th roy for minerals in 151N-97W, Sec 19,30,31 is this a good offer or can I get more? Thanks


Since they have already drilled a couple wells, I would be asking for a lot more.

T-151 R-97 spacing sections 18-19 producing since March 2013 has produced 188,843 barrels of oil as of April 2017.

Sections 30 and 31 comprise a single spacing. production beginning in May of 2011 and the well there has produced 173,796 barrels of oil through April 2017.

New wells do a lot better than this.

Negotiation depends on how many net mineral acres you have. If you have 10-20 net mineral acres, I would negotiate hard. If you 0.5 net mineral acres, congratulations, you have lunch money to enough for a nice family dinner out.

These days I would look for no deductions ever for anything but taxes.

If I had 10 net mineral acres or more and wanted to be leased, which I generally do not these days. I would tell them $3,000 per net mineral acre and 22%. I would tell them that if they don't like that they can send me an AFE so I can participate in the already paid for wells and I will take 100% less cost of production.

In theory you wouldn't even have to pay participation cost of the wells as they never asked you before drilling and the chance of losing the well bores and the well never paying out is past so as I said, theoretically you could challenge any risk penalty. I just have not found a lawyer in ND yet that I would trust to carry out that action.

Participation I could handle on my own. I write them a check and they write me a bigger check. And my checks are 4+ times [after expenses] what they would be with a 20% royalty from then on. But there are some headaches that go with being a small oil company in essence.

let them decide if they would like to lease at my terms, or if they like, I'm willing to negotiate upwards, their choice.

Your wells are operated by Continental Resources and Burlington Resources.

I presume you have been approached by Diamond Resources. Frankly I wouldn't even talk to Diamond Resources. If you communicate with Diamond Resources at all, do so by mail only, so you have everything in writing, save even the envelopes the letters come in, which I did so the lawsuit against Diamond Resources was settled in our favor, with Diamond Resources having to obtain releases of lease from Continental and Burlington Resources. If you shake hands with Diamond Resources, count your fingers after.

I went back and looked since I had more time, at several wells within a mile of yours and see that several have produced as much oil in 18-24 months as yours have in 4-6 years, which is what I mean by wells these days being better. You are in a Good area with multiple wells per spacing to be expected. If you sign a lease, it will probably be in effect for the next 60-100 years or longer. Make certain that you get absolutely everything you need out of the lease because there are no do overs.

You can certainly get more than this. I work for an energy management group that helps landowners and I can help get you the best offer if you would like.



Thanks we will participate then!

It looks likes several new wells have been drilled in this section. Are the wells running through section 18 in the same spacing unit as the well you mentioned that has been producing since March 2013?

James, I didn't count the wells but it looks like about 9 new wells have been drilled from section 30 going north through sections 18-19. The wells are described as shut in and have been for about 2 months. The reason for this shut in could be a lack of equipment to complete the wells and they are just waiting on availability for enough equipment to do them all at one time which can be beneficial to production.

James, if you have not already, you might want to join the Bakken Shale and McKenzie county groups. Just look towards the top of the page where it says groups and select county groups and scroll down to N. Dakota.