Have 160 acres (minerals) in Mountrail County ND. 151,90,24, NW 1/4. Lease expiring 4/07/12. Would appreciate any information regarding bonus, royalty, length, and recommended companies that would be willing to offer lease that also drill. Received an offer for top lease but would prefer no to go that route. Appreciate all answers.
Sigrid:
Your minerals are in a very "hot" area of the Bakken and leasing will be very easy. I would allow the lease to expire and begin to market your minerals to various operators. Further, I would not accept less than 20% royalty with a 3 year max. on the lease. In this area, most likely you will be contacted by numerous companies but I have found that the oil companies use a lease broker to negotiate the leaseing. You can always ask who they are leasing for and gather information on the operator. Keep in mind, if a lease broker is leasing for Company A, it doesn't mean that this company will actually drill the well. This is an area where you have no control but you do have control over the bonus/acre , royalty, length of the lease and the terms of the lease. Do some additional research about contents of the lease such as "Pugh Clauses", transportation costs of the crude and other matters that will effect your royalty amount. There are numerous posts on this forum that addresses contents of a lease. Just remember, time is on your side and don't be in a hurry to make decisions in the leasing process.
Charles:
Thanks so much for your reply and information. I will certainly strive to do my homework to try to know what should and shouldn't be in a lease. Needless to say, it's hard not to want something to happen asap, but the old saying, good things come to those who wait. Any idea what bonus amounts are currently being offered? I did learn from the first lease not to accept the first offer after the fact unfortunately. Had a friend in Texas that is a lawyer and another that is a wildcater here in Texas that looked over the original lease from 5 years ago and all they told me was that it was a good lease. Again, thanks for the info.
Sigrid:
In regards to bonus amounts, I will hazard a guess and say $2500/acre or more depending on your negotiation power. Again, I think your power would be much greater with an expired lease. In my opinion, the most important factor in the lease is your % royalty as opposed to the bonus/acre amount. Also, the "pugh clause" and cost free transportation clauses are very important but operators will most likely negotiate these items with tricks such as allowing a free transportation clause but lessen your % royalty amount. This is just an example on how they deal and that's why you must not be in a hurry and allow the negotiation process to play out with all parties. As you stated, don't take the first lease package but make sure that the package is the final offer. Just say, will get back with you at a later time and continue to build your offers. When you feel satisfied with a certain offer, then take action to lease. These are your minerals and lease them on your timetable. Keep in mind, many mistakes have been made by a mineral owner under pressure conditions. Good luck in your negotiations.
Sigrid Weber-Ward said:
Charles:
Thanks so much for your reply and information. I will certainly strive to do my homework to try to know what should and shouldn't be in a lease. Needless to say, it's hard not to want something to happen asap, but the old saying, good things come to those who wait. Any idea what bonus amounts are currently being offered? I did learn from the first lease not to accept the first offer after the fact unfortunately. Had a friend in Texas that is a lawyer and another that is a wildcater here in Texas that looked over the original lease from 5 years ago and all they told me was that it was a good lease. Again, thanks for the info.
Sigrid,
While I certainly hope you are able to fetch top dollar for your lease, I think it's important to also be realistic about where your minerals lie. The eastern boundary of the Bakken is a very, very tricky line. You can have wells producing 100,000+ bbl in 12-15 months in one section to barely producing 20,000 bbl a year in the next. A quick look at the NDIC GIS map server will show two wells EOG has shut-in close to you (Sections 12 & 26). There are also a couple of relatively low producing wells in Section 1 (34,232 bbl in just over 2 years of production) and Section 27 (2,690 bbl in about 12 months of production). I have no doubt that there will definitely be companies interested in leasing your land, and I'm in no way insinuating that you should give up hope of receiving $2,500+/acre. However, I would taper your expectations to the well results around you. I was in a similar situation about a year ago. Best of luck to you.
Gene:
Thanks for your great descriptions of what is happening close. All the information I can gather will be a great help as I continue the journey. Would you like to share where your minerals are located?