McKenzie County Lease Info

Oil and Gas Leasing Help
21

Bob,

There is a permit on 148 101 13 which is not too far from you however there doesn't appear to be much action right now in your immediate area and a permit doesn't necessarily mean they will be drilling soon. If it were me I would be patient, hold tight and wait for the action to pick up. Then I would get 2 or more companies involved in order to get the best deal.

If you do decide to lease now I don't know if $250 is fair but I would think it is on the low end. And I wouldn't go for a term more than 3 years and be sure they don't slip an option in. 20% seems to have become the standard royalty rate in the county. Obviously you will want a competent attorney review your lease.

Good Luck,

Terry

22

I wouldn't do it for $250. Tell them $700 acre ,20% royalty, 3 year lease.

If they don't take it, Find a oil company that will. There's over 100 oil companies. Do alittle research.

23

Fran White said:

Thank you, Bob. Did David Hermanson add sufficient clauses for water usage, damage repair, and associated costs that Diamond did not have in their contract or was that yours to define?

Bob Horton said:
I used David Hermanson. He charged $200 per hour and customarily spends about 2 hours reviewing a contract. I was satisfied with his work although I had to do my on negotiating with the landman at Diamond (Levi Olsen). Hope this helps.
24

Terry, When I was negotiating my lease I contacted three other companies that I found online who do lots of work in that area. None of them wanted to make an offer because Continental Oil has already tied up most of the leases in that area. My deal was $350 an acre for 5 years with a delay payment of an additional $200 per acre if they don't drill within 3 years. Our royalty is 18%.

Since then I've had offers from several companies to buy my rights even if they are currently leased. I don't really have any interesting in selling them. I believe I have read something about another deposit even deeper than the Baaken.

Terry Petersen said:

Bob,

There is a permit on 148 101 13 which is not too far from you however there doesn't appear to be much action right now in your immediate area and a permit doesn't necessarily mean they will be drilling soon. If it were me I would be patient, hold tight and wait for the action to pick up. Then I would get 2 or more companies involved in order to get the best deal.

If you do decide to lease now I don't know if $250 is fair but I would think it is on the low end. And I wouldn't go for a term more than 3 years and be sure they don't slip an option in. 20% seems to have become the standard royalty rate in the county. Obviously you will want a competent attorney review your lease.

Good Luck,

Terry

25

McKinzie County has been very active in both leasing and drilling activity. If I were nogotiating a lease, I would ask $700/acre bonus; 20% Royalty; 3 year lease term along with the Pugh Clauses added. You might want to address how you will be paid in the event of a well (at the beginning or at point of sell). Just remember, its your minerals and you can shop around as there are various posts on this forum listing names of companies leasing in that area. Good Luck To All!!