Thanks Snues and r w for your helpful comments.
Great Forum.
You are welcome Mr. Price. I think itâs infinitely better to know than not know, even if the news is bad. When the situation is good, so much the better!
Can someone give me a comparison of the advantages of leasing now with 20% royalties vs. non-participation keeping royalties but no guaranteed payout schedule and nebulous expense situation. Not sure I understand long term benefits.
Thank you for the information and update. RW
S E Thompson, if you are carried interest they can only recover expenses out of the proceeds of your share of the oil. You would likely ( unless everyone around you leased for 12.5%, which is pretty unlikely ) receive 16% cost free royalty, the other 84% goes to pay for your part of the well, expenses and towards a 50% penalty proportionate to your part of the well. With a 20% royalty your checks would be slightly larger per month, unless you are eaten alive by deductions, than with a 16% cost free. I think you are asking what your relative checks would look like if your well reached payout and penalty retirement. if you lease you have the 20% you always had at that point and if you went carried I think you then get at least 4 times as much for the next couple of decades. If the well is a dud and never pays out, big whooptie, if the well is that bad signing a lease wonât save you. Lets talk about the bonus you will miss by not signing a lease, itâs probably less than 1% of what the oil co expects to make off your oil. For me itâs a no brainer, I will risk up to 5% now to gain 70% more later, and I have. If you do have a dud well, a duster, a dry hole, you owe nothing out of pocket. They can put a lien against the production of your minerals, the minerals that arenât there or the well wouldnât have been a dud. They can put a lien against the air in my backyard, for all I care, it wouldnât get them anywhere either. If, in the unlikely event there is another well in the future after a dry hole, go carried again, they canât touch your 16%. Lease vs. carried probably 20% difference in favor of the lease for 2 to 5 years, then 400% difference in favor of being carried for the next 2 decades. If the well never pays out you have no more problems than if you leased. If you reach payout and retire the penalty, and your part of the well isnât paying enough to make the headache worthwhile, you could sell it and retain a royalty interest. I like your use of the word nebulous. There is very little that can induce fear like the unknown. I can tell you about it. I am doing it myself and my brother with me. But until you put in the study to prove it to yourself, itâs still the unknown, and that will not change. I will tell you that my brother is a sure thing kind of guy and I had to lay it all out for him in detail on 3 different occasions and answer questions. Now he is the most rabid anti-lease person I know. None are more zealous than the converteted. We arenât talking about not getting anything, unless of course the well is dry in which case you might be getting 1% with a lease of what the oil co hoped to make. We are talking about giving up 70% later for 5% or less now. I almost discarded this, I;ve said it so many times, that you will have to study and convince yourself. If you decide to lease anyway, get as many offers as you can, and use being carried as reasons for the landmen to bring their A-game, because they are not the only game in town. Might only get you a few more dollars, but they will be your dollars and every bit helps. Have a happy and safe holiday.
Iâm wondering if anyone could give me a new average price paid per acre for leases in Mckenzie County. My family has 195 acres that are leased but no income other than monies recieved each time we re-leas the land.
Can someone tell me how they determine which 2 sections make up the 1280 acre drilling site? For example,there is a well on section 32-150n-98w,(producing).I have a small acreage on the section,29-150n-98,just north of section 32.I am being told that I am getting a small percentage of the well on section 32.
Thanks,Dan
Ron, I donât have any recent information other than hearsay, which if I throw out the best and the worst, anywhere between $500 and $3k and 20% depending on ones bargaining skills. Itâs a big county, large enough that conditions in the NE differ from those in the SW. If you feel comfortable saying where your minerals are located, I would be happy to take a look at any surrounding production and post it here. Some people are surprised that there is anything left undrilled in McKenzie, but I myself still have a parcel in a spacing in the NE of the county that is undrilled, that I have been meaning to look into, I suspect there is no clear leashold majority in the spacing, as everything around it is drilled. Ron, just in case, have you been keeping an eye on your spacing, physically or via the gis server map ? Companies drill wells and frequently forget to tell the lessors that they drilled a producing well. Even my friend Wes Luke listed his minerals for lease here, and I looked them up out of curiosity and found that he had a producing well. Itâs not unusual for division orders to be late, and payments to be even later.
Mr. Kennedy, thank you very much for following up. Our acreage is just outside of Alexandria ND⌠the location is⌠Township 150 North, Range 101 West Section 6: Lots 2(40.15), 5(36.09), SE1/4NW1/4, S1/2NE1/4,less a.625 Located in the SE1/4NE1/4 described in book 46, page 637. Acres 195.615âŚI understand there are wells on 3 sides very close by. Regarding keeping an eye on the property I just really donât know how⌠I would think that if they drill on your land and donât tell you that would be against the law. At least it sounds pretty shady to me. I did e-mail the Co. that holds the lease but they were very non commitable about their plans actually their answers were very irritating to me, they certainly could have been more specific and their comments were pretty antagonistic or unconvincing, made me feel like I didnât have a right to ask what their plans were. I will be very interested in your answer, once again I really appreciate your getting back to me.
Ron
Mr. Foreman, Hunt still seems to be interested in your area from looking at permitted wells. The bakken wells around you look fair but no monsters. Close to you to the SW the area has been drilled for many Madison formation wells, which as they get closer to you they seem to be less productive, but I would not count out getting one of your own in the future if the price of oil rises as it can do. I think your acres are desirable, itâs just that the pace of drilling in the area has slowed. They know what they will likely get from a well in the area and while itâs good, and Iâm sure they will eventually get to it, they are just not in a big hurry to do so. To the north of your section 6 is section 31 and there is a permit there, which does not automatically mean there will be a well in the near future, but shows they are still interested in an area bordering yours. Mr. Foreman, I think your best bet to get their attention is to be proactive in leasing your minerals. If you can get even one other offer it can become a horse race again. They are only ignoring you because they think they can. You could list your acres for lease on the home page of this site at the bottom and other companies that might like to lease your acres, like Empire Oil.
Mr. Smith, the NDIC basically laid a grid over the western part of the state and declared the the 2 section spacings. Most are stand-up, a few are lay flat, exceptions were made where wells already existed. Operators can request that spacings be combined to form larger spacings and spacings can also overlap as in a 1920 acres spacing laid over two verticle 1280âs or across the top or bottom of 3 1280âs. In future we will also probably see many âbandaidâ spacings overlapping section lines that will be a nightmare to figure out and which I think will defeat the NDICâs plan which was to provide an equality of outcome for all mineral owners in the spacings rather than any kind of fairness. People whose minerals are not being tapped have been collecting royalty from my oil for years. I MIGHT collect royalty on their oil IF they are ever drilled, which may not happen in my lifetime, or ever, sure hasnât happened in the last 4 years. These overlarge spacings were designed to hold the maximum amount of acres by production from a single well.
Mr.Smith, the NDIC Oil and Gas Division has the information you need and I hear they are very helpful when they answer e-mail requests for information about specific wells if they are no longer on the confidential list. I have the basic subscription, which allows me to acess information on any well in the state that is off the confidential list. I have small acreage under 10 wells with more to come and to me itâs worth $50 per year to have the basic subscription to the NDIC O&G Div. I also get some joy in telling people they already have a well, if it happens they do and they come here looking for advice on leasing. If an operator wants to lease you, it seems they donât want to mention to you that they drilled the well 2 years ago. I do not mind looking up a well if someone gives the specifics, legal description or API #, giving the cumulative and the last couple months production. I learn something from every search I do. Information on your well that is being drilled probably wonât be available for 6 months after it is drilled and even then itâs usually negative information until the well is fracked which can be more than a year after they commence drilling.
Mr.Kennedy,thanks for the info on an earlier question about the 1280 acre layout.I have a couple more questions if anyone can help.First,where can a person find out what a particular well has produced since being drilled?Second,I have minerals leased in sections 28,29,33-150n-98w that are due to expire in Apr.,with a well being drilled on sect.28,but not on sections 29 or 33.Can sections 29 & 33 be leased again in AprâŚvery difficult finding out info.,being so far away.
thanks for the help,Dan
Does anyone have an interest in T149 R97 secâs 13 or 24 ? If so I have good news for you! You have a well that is status DRL [ probably not fracked ], yet has produced 41,263 barrels of oil since sept. last year. I would say that is a pretty good showing. I have a few acres in the space just east, hope mine does as well if itâs ever drilled.
Can somebody recommend an oil/gas leasing/mineral rights attorney? Iâd like them to look at all my holdings and see what else they can find out, since I really donât understand much about any of this. Thanks.
Does anyone know of an attorney up there that knows about wills?
Diane you might like McKennettlaw.com in Williston. They do wills and estates. I have used David Hermanson with that firm for mineral
leases.
Mr. Tatum, itâs probably because there is already a well in each spacing and you are getting another well to make a total of 2 in the spacing comprised of sections 17 and 22. You have one well producing and the other is waiting to be fracked, or so the map tells me. The well I can see production for is the Bernice 150-99-20-17-1H with 39,922 barrels in 64 days. The gas is already being sold and while it doesnât bring much, itâs better than if it is flared off and every little bit helps. I would call Newfield Production Company and ask when you could expect a division order for the Bernice. If your title is in order they will owe you interest on any payment over 150 days past due. Congratulations, you have wells.
I had an odd call last Friday. I got in touch with Empire Oil about two leases I have with them expiring in July - Sec 17 + 18, 150, 99W. They said thanks weâll check. Friday they called back and said their client was not interested in releasing. Thatâs a first! I have calls to release on everything else in Mckenzie months before the lease is up. Anybody have any thoughts?
Thanks very much
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