Lease rates / terms ? mid-2011 McKenzie County, ND

What are some of the lease rates / terms, as of mid-2011; specifically in McKenzie County, ND...?

I previously leased 300 acres in Dec. 2008 at $375/acre at 15% royalty, with a 3-year + 2 yr extension. Now, an addition 23 mineral acres were found, the well just started producing, but will be on the Confidential list for another 3 months. The oil production company sent me to their leasing agent/company, and their initial lease offer is: $2,000/acre with a 20% royalty, with a 3-year lease, with no extention.

I have read that some mineral owners are now getting as high as $8,000 - $10,000 - $12,000 per acre.

I am also considering, not leasing and becoming a WIO (Working Interest Owner), paying for the drilling of these acres, and production costs, and retaining the 100% 'royalty'/production profits. It is quite clear, in speaking to the production company, that they are using "high costs" and fear, to discourage me from being a WIO. If that is true, then why are companies scrambling to PAY for leases, and only retaining 80% of the production for themselves....Why wouldn't I do it, when I get to keep 100%, and I don't have to pay for a lease?!

Sounds to me, that they don't want the profit 'competition'.




If you were to participate in the well consider that well costs are around 8.5 mill. In some cases more depending on the operator. Your well cost to pay in the drilling and completion would be around $147,000 if spaced as a 1280 acre drilling unit. If its a 640 your cost will be more. Give us a call and I can talk with you about other leasing options if you would like.

303 832 1994