Hope someone can help an old guy with a question.
Say company X leases your minerals.
Company Y drills into your spacing unit.
How do payments work? Is it better to lease with a company that you are pretty sure will drill even if they offer a bit less or does it matter?
Thanks again-
Bill
Bill,
In Williams County there are only a handful of companies that are financially and technically capable of developing a 1280 acre spacing unit to its ultimate production potential. Other well financed and sophisticated participants become partners with the primary operators by paying their share of well costs based on their respective lease positions in the unit.
I prefer to deal directly with strong, technically sound operators or non-operating participants in the business of investing in the Bakken System. Both types of players have their future at stake in the Bakken System development so to me that is of greatest importance to the far sighted mineral owner also in for the long term. Lease bonus is not a realistic consideration in Williams County.
If you acreage is small and you are well financed, there are other alternatives to leasing. Just make certain the reward is worth the risk.
Bill,
My experience with leasing is, the company who does the actual leasing is usually a "leasing company" and not a oil company; the drilling is also done by another company hired by the oil company. The leasing company usually is hired by one of the oil companies to do their leasing for them, so it really doesn't matter, unless you can get another leasing company to give you a better deal.
As far as payments working, once the well is drilled and producing (sometimes there are several weeks that go by before a well starts producing due to time frame of when the well is fracked), you will get a division order from the oil company who is producing the oil.
The division order will have a decimal amount which is you mineral interest in the well. This is determined by dividing your mineral interest acres by the spacing unit acres. This is then multiplied by the decimal amount of your royalty as stated in your mineral lease.
Thanks so much for info-