Leasing Rates Burke County, ND

Oil and Gas Leasing Help
21

Hi T,

After checking the GIS Map of the description you gave T160 R94, I see it's a very busy T/R. I'm somewhat surprised that you aren't being pursued by many landsmen, rather than just one.

I did a quick research of the leasing for that 160/94 on NDRIN, for the past 12 months and found approximately 7 other companies besides Continental that have leased. Continental does have the majority of all leases by far.

Without your exact section(s) posted, I couldn't research your immediate minerals, for active Lessees.

I will list the other 7 companies, the first listed was the 2nd most leases for the T/R:

Northland Royalty Corp--Bsmk, ND

Utopia Oil & Gas-- Austin, TX

Cody Oil & Gas -- Bsmk, ND

Petro Hunt--Dallas, TX

KOB Oil-- Midland, TX

XTO Energy--Sidney, MT

Wyondakota--Gillette, WY

Hope this list helps you to research for a landsmen from those companies. I haven't seen some of these companies listed before, but Burke County is a ways from the usual counties I watch.

As to how far to push a landsmen, after seeing the activity level in your T/R; I would say you could push pretty hard. As to being on the fringe of the Bakken, thats just them using leverage to one up you. It could be true, but I am guessing your acres are of equal importance to anyone within that T/R, and don't let them kid you.

The royalty of 1/5 is good for most any location, but if I were you, I'd continue to research what others in the vicinity have gotten. That figure seems to change readily. And the uninformed MO settles for much less.

If you can even find one other company to show interest, the fun begins; and you can get more leverage as to the clauses and terms. Of the few current leases I opened from 160/94, most seemed to be 3yr leases and mostly 3/16 or 1/5.

Keep going on research, it becomes addictive and fun.

Susan

22

Susan is right, it does become addictive and fun!!! My father told me once, that you are the one holding the money, make them come to you....I am currently a non-participating owner, even though the oil company thinks differently. There are many benefits of pursuing that course also, such as, you are not signing away your minerals. When you sign a lease in ND, the probability of them drilling is high, as Lynn Helms, Director or ND Oil and Gas Commission stated, that every square mile of western ND was going to be drilled and fractured. Think about that. Once they drill, they hold your minerals in production for the life of the well. Decades could pass...So, the bonus payment your seeking is peanuts in the long run. The royalty or even asking to participate is better. You can sell your Authorized Field Expenditure to someone else, retain a higher percentage than lease offers, and still have your mineral rights. Something to think about....

23

Hi Jody, what is the Authorized Field Expenditure? While I'm here, do you know of any landmen or companies actively seeking leases in Hettinger County? We were negotiating a lease this fall with Sullivan Land Resources, but Chesapeake is apparently no longer looking to lease any more in Hettinger County.

Thanks, Ron

jody kuntz said:

Susan is right, it does become addictive and fun!!! My father told me once, that you are the one holding the money, make them come to you....I am currently a non-participating owner, even though the oil company thinks differently. There are many benefits of pursuing that course also, such as, you are not signing away your minerals. When you sign a lease in ND, the probability of them drilling is high, as Lynn Helms, Director or ND Oil and Gas Commission stated, that every square mile of western ND was going to be drilled and fractured. Think about that. Once they drill, they hold your minerals in production for the life of the well. Decades could pass...So, the bonus payment your seeking is peanuts in the long run. The royalty or even asking to participate is better. You can sell your Authorized Field Expenditure to someone else, retain a higher percentage than lease offers, and still have your mineral rights. Something to think about....

24

Considering that no one was available to explain all of this to my mother, ND wasn't quite in the position it appears to be in today...or so I'm thinking for I wonder if 3 years ago a better rate might have been presented to her. The area in question passed to 3 children is in section 6 of T160 94W and after it was pointed out I should take a look at NDIC Gas and Oil site, by far there is more activity west of Section 6 or further south. Sold the thought that geologists are well aware of where to concentrate, as a new person to all of this it can be overwhelming from the start for terminology is new as is the thought of a landman. I've spoken to only one person and yes, the gent has been informative but stated he would be firm at what was offered as a top and this would link directly to Continental.

I haven't noted anyone going over 1/5 for Royalty. Other sections have posted 3/16 or similar 1/6. Possibly as efforts increase something more might be offered but no one wants to force a hand do they and irritate those making an offer? I would believe you'd push those interested away and you would lose out for not knowing who else to contact.

I do not know, for example if (1) landman might be representing any number of companies...say XTO, KOB Oil, Hess etc. or if those companies hire the landmen themselves and their sole purpose is to seek out those with unconfirmed leases. As you are aware it is time consuming to research and of the few companies I looked at...Hess was one, I didn't see anything jumping out to the viewer as a spot to concentrate on, get a name and then call that person who represent ND for example. Perhaps a landman in ND can also represent TX or MT. I have no clue.

For this reason, I am limited at this time. 1/3 of the acreage my family has maintained was bequeathed to me. A 2nd third went to a brother and 1/3 went to a sister who preceeded our mother in death earlier in 2010. She in turn willed her share to my brothers 4 children..so they get 1/4 of the 1/3. I notified my brother that information has crossed my path for renewal of the lease but I have yet to hear from him.

The reality is that I do not need his support or approval nor he mine as I have been told I can go ahead and lease my 1/3. It would be nice to be able to confer and pass along the appropriate landman or company to sign with but at this point I'm gleaning knowledge from those supporting this website and certainly appreciate the responses afforded me.

All indications are that in the next 3 to 6 years drilling may well be started in section 6 of T160 94W. It appeared only 1 rig is drilling and was told another is permitted or something like that. I do not have the money to stand behind placing a drilling rig and like most would opt to sign with a decent firm and sit back and cross the fingers.

As it is, Diamond Resources has been a broker for the acreage retained by my family for years. Thus it is that with the lease about to expire that a new lease would be sent toward my mother. As I did the probate for both my sister and mother I rec'd the paperwork and have the task of initial contact with Diamond. The landman I have spoken to does appear fair and not overly pushy and has taken time to assist with a few questions.

It was thru chat with R.W. and Andy initially on Monday that allowed my being a bit more informed. Learning more now is supportive but I'm still in the dark in how to reach or be reached by additional landmen to see what else can be offered, if anything. This is the difficult task for I have been unsuccessful in finding anyone else to contact. Again thanks as I'm pushing forward.

25

T,

I will need to scroll back to read what RW and Andy said. Right now, after looking at the GIS Map for your specified land description, as well as NDRIN; I am too much of a novice to add further advice beyond suggesting you get someone to help that knows what needs to happen.

There is, indeed a well being drilled on your land, well # 22188 by Continental and is currently on the confidential list. Whatever song and dance that landman gave you to being on the fringe is incorrect. You're nicely spaced in the oilfield named Stoneview. Yes, there is more production to the west of you a couple miles, but don't discount the prime minerals you hold.

In the NDRIN, there were 3 documents with your mothers name as Grantor in a Trust as well as 3 heirs. The oil company to last lease it was Jolette Oil, back in the early part of this century, there was a ratification and amendment to it in 2009, but I didn't understand it. It seemed to me, as though they were claiming it to be HBP--held by production, but I don't see where there was any production at that point to extend the lease. I did not see any leases currently held by the others mentioned among the Trust document, so if your brother is uncooperative, you do have the right to lease with or without him, unless this Trust still exists.

Maybe RW can further check into this, as he understands the words better than I do.

Once again, I will suggest help and Buddy Cotten is the best at what he does. Here is his website to check out and decide. http://cottenoilproperties.com/services.html If you choose to do more searching before hiring him, thats all good. Given your circumstances with a well already being drilled, is WAY more complicated than just learning to get your minerals leased. Having the right information to give you all you have coming from this well and future wells, is now extremely urgent.

I know you feel uneasy about turning away this one landsmen, if you make him angry, or asking for this and that, etc. Right now, you have all the power and he's going to try to keep you in his sites, because you are gold to him. You could out right tell him to take a hike and he'd still try to keep you on his A list.

Best of luck to you.

Susan

26

Mr. Starkweather, you can google the companies Susan listed above, for contact numbers. Any live person should be able to transfer you to the land dept or give you their number/ direct you to whomever is their leasing agent. I don't think a landman would represent two companies looking for acres in the same area, conflict of interest and lawsuits come to mind. Any landman you talk to probably knows others in their field, if they themselves or their principals are not interested, ask if they can refer you to someone who might be. I appreciate that you don't want to lose a bird in the hand for one or more in the bush. My personal negotiating style relies on the fact that I will wait for another offer or happily be force pooled, which isn't as bad as it sounds by any means. If a company wants your property they likely will not walk away, they can't make money off your acres if they don't lease them, at least not the kind of money they want to make. My somewhat more abrasive style isn't for everyone, but i have brought up an offer from $100 per acre and 18% to $3,000 per acre and 20% in a week with the bit in the dirt. People will say that royalty rates have only been 20% in ND in the last few years. I have seen the leases where my father lined through 1/6 and wrote in 20% from the early 70's. The thing is, if you don't ask, you will not get.

27

R.W. and Susan...my negotiating skills are different than most as well. No doubt the landman that sent the letter to my mother and then found out I was the one that assisted with probate quickly changed terms when he became aware I knew a bit more. At times I might put the cart b4 the horse but I do try to become better informed so that I will not be taken advantage of. I don't want to jump to assume that just because a drill is in the area or it is confidential in nature that it means a thumbs up or down for exploration. It just appeared that in Sect 6 that there was a lot of space North/South/East and West that in turn was better populated whether existing and old wells or current activity.

Without having a separate and independent landman to talk to that is unaware of my knowledge, I have nothing to compare to. Being told that Continental is a predominant outfit in the Bakken with over 901,000 leased acres to their credit compared to others. I question whether others could finangle a hold inside a perimeter wildly occupied.

I have a ways to go to become thoroughly versed in what is transpiring in Burke county. My immediate need is to find a 2nd or 3rd landman somehow to chat with. There is a lot of catching up I have to do to understand.

28

Mr. Starkweather, individuals and other oil companies often participate in other operators wells. I have a well drilled by SM Energy that I think they have less than a 60% majority interest. Anyone can participate in your well, all they need to do so is to lease someone in your spacing, and there isn't a thing in the world that Continental could do about it. The fact that Continental has 900,000 acres in the Bakken or a majority interest in your spacing has nothing to do with it, I believe that the next largest has over 800,000 acres in the Bakken. I think they are trying to bamboozle you with cow flop. I'd say stick to the issues at hand, you have oil that they want to make a 300% to 1000% profit on. Since it's your oil, why can't you make 22.5% or even 25% ? Remember that a very large part of what you get will go to taxes, possibly 30% to 40%. With decline of the well you may be shocked by how little you get from it each month 5 years later. If you lease and the operator produces, there is no do over! The deal will bind you and your heirs, possibly for the next 100 years or longer. Make the very best bargain you can, consider your effort a gift to your great grandchildren.

29

I can appreciate your positive thought R.W. Certainly I can try for 22.5 or 25% and yes, realize that taxes will have to be paid on a 1099 or whichever. Money to be made is by the landman acquiring the lease rights for the company, by the company selling to whatever market is out there and to myself. Not married and w no kids, the thought of gifting to grandkids is not a reality for me but I understand the thought...the future for someone should be considered.

Besides Continental there is Hess, EOG Resources, Brigham Exploration, Exxon, Marathon or some 25 other companies who appear to be or have worked the Bakken. How active, how big or small they might be, the long haul is a main goal. As long as the highest percentage is paid and the company doesn't appear to be close to failure or going bottom up, I'll consider signing but can appreciate all that those participating here have assisted me with.

I understand fully what you are saying though...that once the lease is signed, legally there is no turning back and not until that term lease expires. I would like to make a decision by the end of this next week though. By the way, R.W. if a person...you or I signs a 3 year lease....but then is offered a Royalty....If drilling commenced and became lucrative, are you saying from then until eternity that the company offering the lease....has full right to the oil being pulled no matter if the 4th or 100th year after that? That no additional paperwork is signed for continuation? It would make sense and hence wanting to get a higher % in your lease agreement.

30

Mr. Starkweather, your last statement is the essence of it yes. As long thereafter that they can produce oil and gas, even if it is 1,000 years. Also, dont worry about a company going belly up, as long as that well produces, someone will own it, that someone will owe you money. If an airline goes belly up, the planes do not just sit there, someone will operate them, if they are still serviceable.

31

My attorney told me that diamond resources is continental. Have you heard this as well?

32

Hi Cara ! Yes, Diamond and Continental even have employees in common, meaning working for both at the same time. I'm sure Diamond would act as lease agent for another company, if the opportunity came up, just because they wouldn't pass up a buck, but not if Continental was after acres in the same area.

Cara Simmons said:

My attorney told me that diamond resources is continental. Have you heard this as well?

33

Yes, Cara....Diamond Resources is a broker for Continental as R.W. pointed out. The soon to expire lease my family has had was provided by Diamond years ago and the first offer or renewal paperwork came from a landman (Diamond) on behalf of Continental. My limited, but somewhat growing knowledge leans to believing there is more integrity among the landmen than I may have thought previously. I was contacted in June 2010 by a competitor from Lone Star who today says a conflict of interest would prevent his acting further. Unsuccessful at this date to reach anyone else other than the super assistance offered by R.W. and a few others commenting, I would not be in a position to better understand what is going on. So much more to learn or stay abreast of as it is in my best interest also.

34

Thanks again everyone!

35

Hello all, I had no real reason to sign in for the past few weeks, but in the mean time have a few tidbits to pass along regarding my opinion of Diamond Resources and a lease agreement that came to my home for renewal in T160 94W Sec 6. The proverbial carrot was dangled for 3 years ago a lease came to my mother for renewal at $185/acre but the new least listed $800. The moment I identified to the landman that I had made contact on the MRF (did not reveal as to whom), he immediately and within 2 minutes of conversation stated "I can go right to the top and will give you $1000/acre and a 20% royalty". By the end of that week thru more assistance I indentified I wanted a pugh agreement, etc. and was told no problem and that a new lease would be written up and sent to my address.

Considering I work 190 miles from my home, I identified this and was told it would be sitting there waiting for me when I arrived. (4) days later it wasn't there when I drove home. The following Monday when I indicated this to the landman I was confronted with my being "impatient". By mid-week with mixed text messages with a brother, I was told by the landman to hold off signing the lease as he had better news to which I asked "what"...what you've already told me or something different".

Apparently Continental decided to raise the stakes again to $1200/acre and I went "wow". But then, on the 31st when I managed to finally speak to someone from Continental, I was told that the Points well drill date was pushed up to the week of Feb 8th...coincidently in tune with my birthday. This I found would totally wipe out the lease renewal of this upcoming March 15th so no bonus would be paid out.

I'm sure I'm not the only one to feel this pinch but realizing the original lease still holds I have no choice in teh matter anyway. What I'm irritated about is the confusion and wondering "what", if "anything" is going on in T160 94W Sec 6. With nothing but the "Points" well in that section, I'm not speculating and realize it might take months before knowing anything. Remote as it is compared to other activity west and south of that section, I realize if the well doesn't pan out...chances are probably shot for anything in the future.

Has anyone got any knowledge of activity currently in that section? As before, your guidance/assistance is appreciated! Thanks! Tim

36

By the way....I didn't mention that when I returned again to my home, I found the new lease agreement now in my name as I qualify for 1/3 share in the acreage.....but instead of the $1000/acre that was identified to me by the landman, instead was posted $800 as offered my mother. Yes the other terms were included...20% royalty and pugh agreement and severance...but not the $1000 and not in time to get the $1200 that was dangled either. I was told the day I contacted Continental that letters were being sent out to those who had gotten prior lease agreements. By this time of seeing that additional letter when I returned to my home again, I had already put in to the mail the lease for $800. Miffed by the terms not being what I was told on the phone by the landman and a subsequent follow-up email note I sent to the man the next day and nearly a month ago already, I realize landmen are busy....but if 2 of the 3 items we discussed and put in to a lease that was rushed to my home, then why not the $1000/acre that was discussed? Well I did sign but realize also I'm like many others and may not ever see a lease renewal after the Points well is sunk.

37

I think that an $800 bonus and, more importantly, the 20% royalty is probably a great deal in Hettinger County right now. We'd accept it under those terms on our section with the pugh clause, etc included.

Just my thoughts,
Ron

38

John my mother has mineral right to 160 94 3 which is pooled with 10 and i guess 10 is drilling right know. My question to you is did they ever drill on 8 and if so was it good news? I am just curious to know how hot of an area this is. And one last thing if they did are you getting checks yet?

39

Anyone seeing any drilling in Burke County? We have a lease with Samson with only a year left and no sign of them drilling any time soon.

40

I believe there drilling on section 160 94 10 in Burke. We have a lease with Samson in Divide county that is about to expire I think also. Maybe Samson is dragging there feet?