Thanks, I guess the hunt is on.
Bonnie, if you do a well search on the NDIC O&G site it will give the spacing information, but you can also tell from the GIS map if you learn how to read it by selecting the drilling /spacing box from the right side of the map. You can select back and forth until the fine outline becomes apparent. Yes Bonnie, the names are similar but one has the tag 1H after it.
Kennedy, does it look like we should get division orders on both wells then where they both pass thru 21, 28, 33?
I have minerals in 1+26, 147N, 99W. The most recent leased expired on April 1. I was contacted with an renew of the lease $500 per acre and 3/16ths. I thought they were kidding. Called them back and asked why so low. Their agent told me that the wells in 147,99 and surrounding areas are dogs - not producing well. Can anyone confirm this? Thanks for replies.
Rick, the wells in 147-99 do not look like dogs to me.
The one operated by Burlington had some trouble, producing less than 16 days per month in at least 9 months, thus the low 40,706 cumulative oil production. If you donât produce them, of course they will not be productive. You are not responsible for their mistakes while drilling.
One drilled by GMX and now operated by Thunderbird 69,380 bbl as of Feb, 22 months production is not bad even knocking $5 off per barrel of oil for water disposal because it is a little water heavy.
Second drilled by GMX now operated by Thunderbird 43,477 bbl oil in 13 months.
Points being, these are not expensive wells, not $10,000,000 wells, more like 2/3rds of that. IPâs ranged from 598 (Burlington) to 2,200 + barrels for the wells drilled by GMX and Iâm not thrilled by GMXâs competence.
If these wells were all out 25+ frack stages with ceramic propant, then they might have some justice on their side but for the cheap wells they drilled and the problems created by Burlington themselves, sorry, Iâm not buying that it is a bad area. If itâs not profitable, why are they still trying to lease it? LOL. Cheap describes the situation, they want to lease it cheap, they want to drill a cheap well that will leave oil in the ground and they want to hold the acres cheaply for decades before they drill more wells.
Iâm not a big believer in peak oil, there is plenty of oil left, we already know where it is, itâs just harder to get to and un-economic to produce at todays prices. Your oil is economic to produce today and it could be wildly profitable to produce 20 years from now, I would certainly want to be unleased at that time. Would not lease for $500 per acre in any case. For that amount the mineral acres could stay my own appreciating asset. As an investment, you are already in on the ground floor. Considering the cost of the wells and initial production, I would consider participation in part or all of these acres. Since you donât have to pay anyone a royalty, your part will pay off 18.75% faster than the operators. If you are making money, the tax deduction on drilling costs is awesome. The first couple of years production is basically federal tax free and you have a 15% depletion and you get 18.75% more from the well because you donât owe a royalty? You could have a large part of your investment back in the first year, be totally paid back in 2.5 years or less and reaping profit for decades to come.
18.75% would not turn a good well into a dog for the lessee but I think it could turn a good well into a very good to great well should you be able to participate. At worst, being non-consent will eventually pay more than leasing and will keep your upside open for the future. Lease values are still rising. I still get lease offers from my operator on my non-consent.
In your place, I would offer to lease them that wellbore and all they could produce from it but they wouldnât go for it, they want title to all of your minerals and only intend to pay you single well price and lowball you on that. Good luck in your decision Rick.
33 is where one of the wellheads is, but 33âs minerals are not being produced, that well produces minerals from section 28 and 21, irâs called offsite drilling. You should get a division order for each wellâŚ
Unless, and I hate to bring this up, much of the sections are under water. There is a navigable waterway through it. The state has been claiming minerals in such areas, I donât know exactly where your ownership exists and not all of the sections are under water, but there is the possibility that you donât own as much as you think you do, or you would have an uphill court battle against the state to preserve your claim. If the state is claiming, it may hold up title and division orders for some time.
I hate saying the above so much, but I would feel worse not mentioning it because it might blindside you one day.
Anybody know anything about the Stubbs well on 152-104-21 & 28. Seems like there are two wells named Stubbs. They even have 2 different file numbers 21846 & 25488. ???
Bonnie, 25488 is a good well and was drilled in SECTION 33 with the wellbore passing through sections 28 and section 21. Spacing 1280 acres. Production of 55,374 bbl oil in 7 months and in December was only produced 2 days for 350 barrels, probably because of trouble moving the oil.
#21846 is a different well drilled in SECTION 28 with the wellbore remaining in section 28 spacing 640 acres. This well produced 7,565 barrels oil in January in 17 days. February numbers have not posted yet.
I hope this helps. I also hope you have acres in section 28 because you will need to to get paid from #21846.
Hi Mr Kennedy, just saw your comment. Thanks for that. I was thinking and feeling the same way. I do wonder about production in that area. But I told them no, Iâll wait and see. Thanks again.
Thanks Kennedy. We have acres in both 28 and 21. So does that mean that we get paid from two wells with the same name? Also, where online do you find the spacing of a well?
Mr Kennedy, I have a request. would you look at the 25593 well files and give me your take on whats going on with that one. The survey line doesnât go all the way thru the spacing unit and in the summary it just says they ran into something that broke the bit or string or something. Sayâs nothing about waiting on completion like the others do. Just curious. .
Grandpa used to call sec 28 the island, so I imagine the water does shift back and forth thru there. What is so frustrating is that yes, the river changes, but the ground under it where the mineral rights are, doesnât move. I can see loosing water, but not ground. Oh well, we are just thankful for what we have received from our inherited mineral rights over the years⌠something we surely never planed on. Thanks again for your information. You are so helpful!!
Deloris, they do say that the drill string twisted off but probably only a little more than 1200 feet short of total depth. This will cause a reduction in production initially but long term wonât make a huge amount of difference because 70% of the oil will come from the first 4,500 feet of the lateral. The geologists report was not raving about the trace oil shows while drilling but I would not pass judgement until the well starts producing. Sundry notice in the wellfile estimated that the date to start fracking would be March first, it may be fracked, might be being fracking now or not fracked yet, but reports usually lag and it will be a couple of months before I can tell. All I can advise is patience at the moment.
Kennedy, thanks again. I hope someday I have the kind of background information that informs your opinions. All very helpful. Being a sub chapter S corp I know that some of the shareholders would balk at participating but Iâll bring it up. For now Iâm letting the lease expire and see where the offers come from - see who is actually drilling. Thanks much.
Once again, Mr Kennedy, thank you.
Rick, you would not have to participate for all of it. Frankly, I would just be non-consent because the kind of money from a cheap well is not going to be a huge difference. 16% vs. 18.75% in the cheap wells they have been drilling? Itâs not going to amount to much for a very long time and by that time or shortly after you will be a working interest and the shoe will be on the other foot making 3 or 4 times the amount those who leased made. You will make roughly 7/8ths of the royalty you would have made from leasing from the very first barrel until it pays out anyway.
I just canât generate much enthusiasm for selling 81.25% of my oil for $500 and an extra 2.75% royalty when I know they are going to drill a cheap well that will leave recoverable oil in the ground. It might be different if they were going to drill the best well possible 10-11 million but a 6.5 to 7 million dollar well that cuts my royalty? I canât say I would be in favor of leasing it. Knowing they do not plan to fully develop my minerals, possibly not in my lifetime, would not please me either and I hope I have at least another 20 years in me.
Knowing they are going to drill a cheap well
It will leave recoverable oil in the ground you will never be paid for
Your minerals will produce only a small amount for a long period of time so the extra 2.75% royalty from leasing will be barely noticable
The operator will not get your minerals into full production for a very long time, one or more decades
The operator will have title to 81.25% of what is now your oil
You lose all opportunity to bargain for more in the future
The $500 per acre bribe you are being offered to forget all of the above is in my opinion, inadequate.
The cheap well that leaves recoverable oil in the ground would be more of an issue to me than the low royalty because you are going to collect 0% royalty on the oil that will not be produced by the cheap well, far more costly to you than a couple % royalty on what is actually produced.
I have been negotiating with Diamond/Continental regarding a new lease (their prior one has expired) in 146-98-6. Today, they announced that they have decided to âshut down leasing in this townshipâ. I am not certain whether this is true or they just got tired of dealing with me. If the latter, the sentiment is definitely mutual, particularly because there are often so many problems with them on the back end. Does anyone have a feel for this? Given what I have been reading lately, I am starting to think that not leasing might be the better route. The meager bonus money gets eaten up in taxes anyway. Does anyone have a feel for this? And, yeah, I realize that they probably monitor this blog. I donât care. Thanks. JSM
M Barnes, is this for acres you leased from someone or acres leased from you?
If for acres leased from you, I would work that from the angle that if they canât find a lease then I am unleased, how much money do they owe you? Could you possibly participate by handing them a check and they hand you back a bigger one? I believe they would find the lease.
Have you always had good title and interest has been accruing at 18% a year for 5 years?
You have to hit them where they live, they get quite lively when you do.
You might record a lease forfeiture notice. Consult your lawyer.
Mr. Murray, there is some production near you, the well drilled in 2011 is worlds better than the well drilled in 2006. Waiting is not always a bad thing.
Itâs a strange situation, KNOWING you have oil under you. I object to companies trying to lease me as if this were 40 years ago and there was doubt whether they would find anything worth producing or not.
When they offer too little, to me it totally defeats the reason for leasing the minerals. The minerals almost 2 miles down there are not bothering me, I donât feel a burning need to get them out of there.
I know the minerals are there, they know the minerals are there. The operator stands to make alot more off them than I do, certainly at what they generally offer, so I donât mind sitting on them. I wonât starve and someone will come for the minerals eventually with an offer I can live with.
There is also the matter that the drilling technology keeps getting better. If it takes 10 years to get a well, and that well produces 25% more oil than one drilled today which I consider easily possible, waiting is not such a bad thing. Also, while there is production near you, having a couple more wells drilled near you to exactly pin down the geology is not a bad thing. I have some 2008 wells, the wells drilled 3 years later surrounding my sections produce twice as much oil in 1/2 of the time, due to better completion techniques and the geologic information that my wells provided.
I am lucky to have some wells in Dunn county that are extremely productive cash cows and the operator is at least continuing to develop the spacings. My McKenzie county acres while good look to be part of the land grab and the drilling program appears to be âone and doneâ in 5 separate spacings. I would rather those wells were not drilled and that I had wells drilled with todays completion techniques. I have never received a dime from these McKenzie county wells, Diamond and Continental are mixed up in the mess and there is a lawsuit. Even if I had received what I think I have coming to me and not what they want to give me, it wouldnât buy a new car. I have spent more than that in legal fees. I would say you are well shut of Diamond Resources. Continental sold a half interest in my acres that I believe they do not own and my lawyer is working on that right now.
At the very least, if you have to wait, I believe you will be paid for waiting.
Mr. Kennedy: I always appreciate it when you respond as I know I am going to learn something useful. Iâd be curious to know the general nature of that lawsuit involving Continental and Diamond. Let me see if I can pull it up on Google. I just realized a couple of other Diamond leases have recently expired or are about it expire. It really brightened my day. If I am lucky, I will time out of all my prior dealings with them in a few short years. Thanks. - JSM