We own some interests in Sec 8, 160N, 94W in Burke County, ND. We’ve been notified by Continental Resources that they plan drill a new well (Overland #1-8H) and have been given the option of being a participating owner, non-participating owner, leasing to Diamond Resources or selling to Continental. We are interested in leasing and wondering if anyone has some recent info on bonus money and royalty percentages for this area.
Here's a link that shows the August 11, 2011 auction results in Burke County. It'll give you an idea of the going rate for leasing. You can also look for past auction results to see if interest is trending upward or downward.
Outstanding. Many thanks Ronald!
Ronald M Gall said:
Here's a link that shows the August 11, 2011 auction results in Burke County. It'll give you an idea of the going rate for leasing. You can also look for past auction results to see if interest is trending upward or downward.
Andy,
How many mineral acres do you have? That will probably have an impact on how much you get.
It’s a real small one, about 6 acres, so I’m not going to be ij a position to do much negotiating. Just trying to get a rough handle on what to expect for an offer. Thanks.
I would say that you have tremendous power in this situation. If they are planning a well, your value just went up. Start at $2500/acre, with minimun of 20%, and no longer than 3 years. If they drill, this will be the last bonus payment you will ever recieve, as they will hold the lease forever!!!
Our family has over 300 acres in Burke County that we are wanting to lease...Township 161 Sections 19 and 24. Anyone have any info on who might be leasing in that area?
I am new to all of this that includes jargon, who to contact, who to trust, who is reliable and the list goes on. With 191 acres in Burke County that has been passed down since the turn of the century, I have been contacted by a rep from Diamond Resources with a rate of X per acre in Range 94, Section 6 and curious as to the going rate and whether to lease for 3 years. In reading what was posted in October, I realize that info varies per range, section, township, etc. but if some can get upwards of $2500/acre (if possible), any help is appreciated in knowing who to trust in identifying what is fair compensation as I do not want to just leap because an agreement has reached my mailbox. I want to be as informed as possible. As it is, the 191 acres will be per probate, divided by 3 so my share will be 191/3. Many thanks
We signed leases with Continental the end of Oct on two parcels:
1)T160N R94W Sec 8 SE/4NE/4 & NE/4SE/4 where Continental was spudding the "Overland #1-8H" on 12/2/11
2) T160N R94W Sec 9 SW/4NW/4 & NW/4SW/4 where they were scheduled to spud the "Lucille #1-9H" on or before 1/1/12 depending on rig availabilty.
Both leases were at $1000/acre, 3 year lease at 1/5 royalty with 2 year gas shut in clause and a vertical severance clause. With respect to the bonus, you can ask for more as Jody says. If the Overland comes in you should be able to get more. But I am generally more concerned with the terms of the lease, especially the royalty %, than with the one-time bonus.
Hope this is of help.
T Starkweather said:
I am new to all of this that includes jargon, who to contact, who to trust, who is reliable and the list goes on. With 191 acres in Burke County that has been passed down since the turn of the century, I have been contacted by a rep from Diamond Resources with a rate of X per acre in Range 94, Section 6 and curious as to the going rate and whether to lease for 3 years. In reading what was posted in October, I realize that info varies per range, section, township, etc. but if some can get upwards of $2500/acre (if possible), any help is appreciated in knowing who to trust in identifying what is fair compensation as I do not want to just leap because an agreement has reached my mailbox. I want to be as informed as possible. As it is, the 191 acres will be per probate, divided by 3 so my share will be 191/3. Many thanks
Again, new to this. I sent a reply but instead a duplication was made of my prior question/s. Bear with me folks as a newbie.
Acreage in particular involves T160N R94W Sec 6 SW/4Ne/4 with 4 lots. The agreement that arrived indicated $800/acre for 3 year lease. I haven't looked further in to it. Unaware of what leasing firm is most fair I realize all things are different and approached differently.
Unfamiliar with "Overland #1-8H" or "Lucille #1-9H" both drilling operations may be distant from the acreage owned by my family. Unknown to me also are things like you mentioned of 1/5 royalty with 2 year gas shut and a vertical severance clause. I hate the thought of retaining an attorney just to understand the jargon so appreciate any suggestions at this time.
Ok...let's see if I can send this correctly now.
Mr. Starkweather, 1/5 royalty would be the same as 20%. I presume that the 2 year shut in means that the operator is allowed to not produce from the well for 2 consecutive years or 2 years cumulative over time as long as they pay shut in royalty ( you can bargain for much more than the $1 per year shut in royalty also ), also presumably the lease will be forfeited if the 2 years is exceeded. The verticle severance clause would mean that produceable zones/formations a certain distance above and or below a zone/formation that is being produced would not be held by production at the end of the lease primary term and could be leased again. All are good things to have in a lease contract. Mr. Starkweather, the important thing is to not leap into anything as you have already stated. I have had potential lessees increase their offer just because I hadn't replied. A great deal of information can be found at the top of this page if you mouse over Mineral Help and make a selection. You may also find helpful information by joining the Bakken Shale group. It might also be helpful if you started your own thread. I also recommend that you deal with landmen through mail and e-mail so you have a record of what is said. My brother and I have had a pretty bad experience in dealing with and not leasing to Diamond Resources. I recommend that you document any dealings you have with Diamond.
Mr. Starkweather, "R.W." pretty well covered what I was about to tell you. A lot of us on the forum are newbies and that is exactly why we are here - to learn. Fortunately for us there are expoerienced folks like "R.W." who are willing to share their knowledge.
In addition to his comments, I would suggest you join the Burke County Group as well as the Bakken Shale Group.
With regard to the gas shut in clause, here is the way the clause read in my initial leases:
Where gas from a well capable of producing gas only is not sold or used, Lessee may pay or tender to Lessor One Dollar per year per net royalty acre retained hereunder, such payment or tender to be made on or before the anniversary date of this lease next ensuing after the expiration of 90 days from the date such well is shut in and hereafter on or before the anniversary date of this lease during the period such well is shut in. If such payment is made, it will be considered that gas is being produced within the meaning of this lease.
I had this amended as follows:
Anything to the contrary notwithstanding, the shut-in clause set out herein shall not extend this lease for more than two (2) consecutive years beyond the primary term or two years beyond the initial shut-in date, whichever is later.
As to the "Severance Clause", here is what I asked for and got with no arguement:
This lease shall automatically terminate and expire on the expiration of the primary term thereof with regard to all lands covered thereby not included within a drilling and production unit established by the North Dakota Industrial Commission or other regulatory agencies having jurisdiction in the premises, and as to all depths, zones, horizons and formations lying 100 feet below the deepest producing formation, as such formations are currently defined by the North Dakota Industrial Commission. However this lease shall not terminate as to any of the leased lands so long as drilling or reworking operations are being continuously prosecuted, that is, if not more than one hundred eighty (180) days shall elapse between the completion or abandonment of one well and he beginning of operations for the drilling of another well.
I feel this clause could be important if the lessee is targeting one layer, like the Bakkan, and subsequently someone else wants to go after another, deeper layer like the Three Forks. This has been the case with some interests we have in Texas, so I routinely try to include the clause.
My thanks to both "Andy" (John) and R.W. for the support in my 1st day to all of this. I did contact the Landman who had sent the agreement and was greeted by a patient and supportive gent who answered questions pertaining to the Bakken, vertical drilling, etc. Non-pushy he increased the rate initially offered by $200/acre after I made him aware of my signing up for the forem. Without it or your posting, I might be like a lot of people and be unprepared "and" lose out on a bit more in the signing.
Much appreciated is your identifying the shut-in clause, suggesting sites like the Burke County Group, etc. as I will begin to increase my knowledge base. I am aware that the land we own might be on the fringe of areas being explored and as such may not have the value as state owned or similar sites but it is also showing improvement over what was previously paid out 3 years ago.
Prior to signing anything I expect there will be a bit more discussion. So again thanks for better insight today!
Mr. Starkweather, I look forward to your questions. I learn a little bit more every time i consider and research an answer. I looked on the NDIC GIS server map and I saw you were spaced as a single section 640 acres, but around you are spacings for 1280's, 2 sections. You may well have more than zone/ produceable formation, which would increase the value of your minerals. Theoretically tou could be in a much smaller pool with a verticle well, and share in a larger pool if a horizontal well were drilled in your section also. Even if all your acres are in one section you may benefit from a pugh clause, which would release acres not pooled into a verticle well.
As I am digging deeper as now more than interested, I do not have with me currently any kind of a map showing me which town is closest to the acreage I've inquired about. Your mention of the NDIC GIS server map...would this provide anything? How do I get access to it? Realizing it is just a suggestion, has anyone had good and fair luck or response from any attorney's in Burke county they could recommend? I would imagine that anything remotely linked or associated with leasing should be handled with an attorney? If not from ND I do not know how tricky this becomes or who to trust to represent fairly all parties concerned and no matter how big the portion might be? Appreciate your identifying more R.W. with regard to zone/produceable formations, etc. Continental stated that the 195 acres in our family name is on the "fringe" of the Bakken but to my unlearned eye it seems much more inside than just a fringe. Any additional spots I can research for this would be helpful.
Mr. Starkweather, if you search for the NDIC Oil and Gas Division, the Gis server option will be on the left hand side of the home webpage. After you pull up the GIS map, select find section and input your twp range and section, click zoom to section (you may have to click this every time you add a filter). It does not show roads or towns but it does show sections and spacings (check the box on the right side of the page for spacings), permits and wells, and you can adjust the view by adding miles to the filter, or clicking and drilling in, which is sometimes necessary to view wells that are so close one might not show up on the default 5 mile filter. The gis map also shows lakes and rivers, which may be good landmarks. Many mineral owners have lamented that it is hard to find maps with towns, townships, range and sections. Mr. Starkweather. Burke county may be the fringe and may not be as wildly productive as say some Mountrail county wells that pay themselves off in 4 months, but a well that pays itself off in 3 or 4 years isn't chop liver either, it could have 20 years or more of profit after that point. I'd bear in mind that landmen tend to start negotiations right away, possibly even before they find out if you are in the area they are seeking acres, probably a reflex action.
R.W., I did find the NDIC by doing a google search...would be best for me to try that before sending what might seem like a pretty general question but your detailed explanations are far, far better for the less informed. The Landman did say something about being on a fringe and looking at the map, certainly I can see that it appears to be on a border of something that might be a county line. Black dots show activity that is clustered to the west in T160 R95W as well as more central or lower T160R94W. Knowing nothing about horizontal drilling I do see in Section 3, 5 and 10 of T160NR94W that a few drill points are shown.
Obviously it would be nice to be in Sections 19,20, 28, 29, etc etc but that isn't the case and perhaps this is what is referred to as the fringe? As has been said....a dollar today is one more that I had since yesterday so just hearing something more positive in a lease amount being increased is a positive sign.
How nice it would be to last the 20 years you mention. Doing a further search for the Bakken identifies it as the largest find in the history of North American research with a potential in the billions of barrels. Just a small piece of the pie is neat to learn about. Thx
T,
I'm going to share a few tips I learned among these posts, that may help you.
Time is on your side, you don't have to sign on, just because they try to push you into a certain date.
They 'landsmen' are not your friend, they have your minerals in their interest only. They're very friendly and will make you feel like you're best of friends, just keep in mind, they're only doing their job--to get your minerals.
Think Royalty as the steak, and the Bonus per acre as the sizzle. The bigger the steak, the better off you will be. The sizzle only lasts a short while, the steak may last decades.
There are no do-overs on the lease once you've signed, so take your time and get advice if you're unsure of anything. The sooner they push you into signing, you will have less time to learn what you should have included in the clauses and want changes made. I once read stats showed that 85% signed first offer made. That is really a terrible disadvantage for the uninformed mineral owner, and landsmen smile all the way to the bank.
Bottom line, read read read anything and everything you can to learn about this leasing process before you sign, or get help with your leases, if you don't have the time to do it. Buddy Cotten is the best at what he does, and is quite affordable.
Best of luck to you,
Susan
"T" If you're going to be doing some serious "snooping" you might want to consider subscribing to Earth Point, a template for Google Earth that will put an overlay on the Google Earth maps showing the townships & sections. THat will show you towns etc. Also can show either a regular map or an aerial view. The individual subscriptions start at $5/mo or $50/year. There is a free "teaser" version that will give you a taste but doesn't "drill down" very well. Go to www.earthpoint.us . Yes, there is a learning curve, especially if you aren't familiar with Google Earth, but with patience it will come to you (says a 70 yr old).
Hi Susan,
Like most, you're right in that the tendency would be to not question any legal paperwork rec'd in the mail and as my mother probably did, didn't take the time to question the renewal offers she had gotten after my father (her husband) passed and left her in a position she probably didn't want anything to do with. Yes, the landman is there to watch out for the interest of the company they are representing. I could see that when all it took was my calling the rep after getting the paperwork and quizzing about the rate shown which was nothing more than a new lease dollar amount and NOTHING was stated about Royalty, etc. "until" I became somewhat better informed from viewing what "Andy" or R.W. responded to me with. It meant an increase of $200/acre just by my calling. If I had simply returned the paperwork a potential $30k was lost. Of course I haven't seen revised paperwork just yet. A Royalty of 1/5 was offered when none was revealed in the paperwork also.
Thing is, I do not know who else is truly predominant in the Bakken and in particular T160 94W area. Looking at the Million Dollar website and reading a bit there, my unlearned eye saw that Continental has something like 901k acres. Hess 900k, etc. Outside of taking the word of the Landman that Continental is a predominant entity in T160 94W I don't know. Does that mean that Hess or some other source there wouldn't offer to lease? I was told that the acreage I have access to is on the "fringe" and as such it might not be worth as much. State owned auction land might get 3x as much for a rate. All I know is that my mother was paid $150/acre the last go around. Today it is in the $1000/acre bracket and that is a significant jump.
I realize the bonus is the sizzle and it makes sense....that the Royalty is the steak...but how much can you push the landman? If no one else is in the bargaining arena the options diminish. Not looking to wait too long....I don't want to appear overly eager...but at the same time, don't want to lose out while I can.
Thanks!
Tim
Snues said:
T,
I'm going to share a few tips I learned among these posts, that may help you.
Time is on your side, you don't have to sign on, just because they try to push you into a certain date.
They 'landsmen' are not your friend, they have your minerals in their interest only. They're very friendly and will make you feel like you're best of friends, just keep in mind, they're only doing their job--to get your minerals.
Think Royalty as the steak, and the Bonus per acre as the sizzle. The bigger the steak, the better off you will be. The sizzle only lasts a short while, the steak may last decades.
There are no do-overs on the lease once you've signed, so take your time and get advice if you're unsure of anything. The sooner they push you into signing, you will have less time to learn what you should have included in the clauses and want changes made. I once read stats showed that 85% signed first offer made. That is really a terrible disadvantage for the uninformed mineral owner, and landsmen smile all the way to the bank.
Bottom line, read read read anything and everything you can to learn about this leasing process before you sign, or get help with your leases, if you don't have the time to do it. Buddy Cotten is the best at what he does, and is quite affordable.
Best of luck to you,
Susan