McKenzie County, ND - Oil & Gas Discussion archives


#1361

Big shocker here. Yesterday I received a small check and a very long list of deductions from that check - 44 pages worth. The good thing is that XTO finally acknowledged that I do own mineral rights in 4 wells. The bad news is the amount of expenses they have taken from my check. I never signed a lease or division order and was never approached by a landman. How can they simply decided I am responsible for all these charges?


#1362

Janie, I don’t think you are even non-consent yet, as they have never made an offer.

You say the check is small, sounds to me like you have alot of accounting work to do.

Since XTO has maintained that you did not own an interest for so long, I would not assume that they have calculated your interest correctly now.


#1363

Janie, I think they just don’t want to get along.

Have XTO even offered you a lease? I presume not since they denied you even own in the wells up to now.

If you are a non-censenting carried interest, the charges should gome out of the 84% and not from your 16% statutory royalty.

The 44 pages is probably the result of monthly accounting for 4 wells, the check is what they think the owe you to date or what they hope you will accept they owe you to date, which I’m leaning towards the latter.


#1364

Hello good people, new to the board. I have a close relative with mineral rights for about 320 acres in McKenzie Co and agreed to help her navigate various challenges with her position. She recently received a PAID UP LEASE from Ancient Sunlight on behalf of Oasis for a back-dated 3yr term Landman calls is a ‘protection lease’. $500/acre bonus and 3/16 royalty. Aside from declining the title warranty section (which we are inclined to do) I am asking for feedback/similar agreements. From reading this particular board the bonus amount seems on the low side, and 20% appears to be going rate… Many thanks for any comments


#1365

Kevin, I would get cash up front before letting them have the executed lease and I would not just strike the warantee of title but insert language of a broad disclaimer of warantee of title and that lessee leases at their own risk. This is if you aren’t completely sure of what is owned and you want to lease.

Secondly, you do not have to lease in ND, you could be non-consent, recieve 16% statutory royalty and when the well recovers 100% of costs and a 50% cost of actual drilling and completing the well penalty, you would own a proportionate share of the well and receive 100% of production less cost of production for oil attributed to your mineral acres. The difference between leasing and non-consent could literally be millions of dollars. If you have well/s that have been in operation for 3 years, they may be paid off already and the risk penalty could be successfully chalenged because there is no risk and the operator must offer a lease AND if the offer to lease is refused make an offer to participate before a risk penalty can be imposed. I would do a great deal more research before signing a lease.

Kevin, this is no small thing, don’t believe anything you hear and only half of what you read, everything must be in writing no matter how trivial it may seem. Save everything, including the envelopes whatever it is came in. If an oil company has millions of dollars at risk, they will literally tell you absolutely anything that gets them where they want to be. The problem is that they may do something unethical or illegal but any lease would stand until you had a court decision in your favor and you could be hundreds of thousands of dollars out of pocket by that time or have a lawyer working on it on contingency for 40% of anything you recover. Do alot of research and run everything past a lawyer that you can trust.


#1366

Received a production check from the oil company, but they put my deceased mother’s name on it and then mine followed by AIF. I have a poa, but of course they aren’t good after a person dies. Mother passed away in 2005. I have been receiving checks for a couple of years now, so why do they do this now??? Probably just another delay tactic. So very frustrating!!!


#1367

Hi all, I get very small royalties from the below listed, but I can’t find them anywhere on the map. Any idea where they are? Thanks.

hawkeye madison unit tr-0005

hawkeye madison unit tr-0009

hawkeye madison unit tr-0016


#1368

I find a set of 4 Hawkeye Madison wells in the monthly production report, but the report shows no location. Digging around, I found some wells by that name at 152/95/9.


#1369

Mr. Walner, that may have been a benefit of a sale for Kodiak but probably not the reason. No operator sells prime produceable acreage in the Bakken. KOG bought alot of less productive acreage as a package a couple of years ago after getting a $600,000,000 loan and they are probably just divesting the parts they don’t find meet their criteria. To me, Whiting is known to go to great lengths to gain production from areas and formations that other operators do not care to explore. How many wells in ND have you heard of KOG drilling into a formation other than the Bakken/Three Forks? I think KOG wants to concentrate on the sure things and pay down debt and I have been benefitting personally from their strategy.


#1370

Sale of gas makes up a very small part of my checks. The ND gas is very rich, from my wells and others that I have looked at have a BTU factor of 1.41 or better, dry gas being 1.0. That .41 after the 1 is the NGLs which are much more valuable than the dry gas. The true value of the gas being flared is probably almost 2/3rds higher than how the state is presently valuing it.

Looking at my statement for May, I see where my gas sold for $6.40 per MCF and the present comodity price for gas on the site I use is $3.78 per million BTU which is roughly 1,000 cubic ft or 1 MCF of dry gas.

$3.78 divides into $6.40 = 1.69 times so obviously that .41 after the 1 in the BTU factor is far more valuable than the state is using in it’s calculations on the vaue of what is being flared off.

In that article from the OIL CAN, they say that burning gas produces little carbon dioxide and water. Really they should have said that the gas you use at home produces little carbon dioxide and water. The rich gas flared produces a red and dirty flame and not the clean blue flame of your heater or waterheater at home, find a video sometime.


#1371

In a ruling by the NDIC, any well that cannot reduce flaring at the well by 74% by October will not be allowed to produce more than 200 barrels per day at each well. There is a lot of flaring now, and the expense to collect, store and transport natural gas will impact a lot of operators, and the oil production limitations could greatly reduce royalty payments until they comply. I read somewhere that Kodiak sold out to Whiting because they could not afford timely compliance with the flaring rule.


#1372

Thanks RW, that article explains the flaring issue in much more detail. I have an interest in one well by CLR and I don’t know if the gas is flared, but if it is, it will have no impact on royalties because it has been under 200 barrels a month for a while. They may drill as many as 7 more wells at that location, however, and with that much investment, collecting and transporting NG might be economical long term.


#1373

Thanks Ed. I wonder why they don’t show on the ND Oil and Gas map?


#1374

The state bent over backwards to help the operators with the flaring issue from the beginning, allowing flaring of 100% for one year and I think the state expected that operators would act prudently and install gathering lines for the gas. This has not happened. Infil wells have been drilled with no attempt to capture the gas being made.

The operators given one year to flare at the end of the year could claim that installing a gathering line was not econimically feasable because of reduced gas production, especially when the rich wet gas was valued at dry gas Henry Hub price which is often 1/2 of what my gas sells for. The state would grant the operator permission to keep flaring. When the operator drilled more well/s still no gathering lines were installed.

Comissioner Helms has said previously that The flaring of gas is not Waste because the value of the oil is so much more. Somehow I think Comissioner Helms is really bad at math. Commissioner Helms was also primed to issue a statement that Bakken oil does not explode just before that train derailment in Canada where the oil cars did explode. He did not make that statement after all.

The state of ND has been failing to protect mineral owners and the environment for about a decade.

To put things in perspective, much of the new drilling is in less productive areas and the areas are less productive because they have less gas to push the oil to the wellbore. If these wells can produce 100 barrels a day after the one year flaring period, they are doing extremely well. Many of these wells are so gas poor that pumps are installed within weeks of completion. The regulations are a non-issue for these wells.

The areas with a great deal more gas have probably long since been connected to a gathering line. The operators are not stupid, the installed gathering lines where they saw a chance to profit greatly. It’s the area where the profit would be slim that the operators did not want to act in a responsible manner and pay the up front costs for the gathering lines. They would rather use the money to drill more wells that would also flare more gas but would show a return on investment within 2 years. The operator also gets to deduct the flared gas from their taxes, while the mineral owner lessor may not.

The new flaring rules will probably not affect very many wells. The estimates I saw were that production for the state may be reduced by 5%. I think it will be less than that.

I believe the greatest reason for the new flaring rules is Public Relations, after all, the state is actually reversing the policy that Commissioner Helms has proclaimed for years. The train is coming and the regulators want to get off the tracks.

The article below, while I believe it glosses over many of the nuances that are much more important than you might think, is somewhat informative and provides links to the laws.

http://www.northdakotaoilcan.com/NDenergyfacts/Flaring/


#1375

Can anyone recommend a reputable attorney for some curative work in North Dakota?


#1376

I am presently using Crowley-Fleck. They have several offices in the west, but I am using the one in Sheridan, WY. They are professional, and have a good understanding of the O&G business. They are also responsive and good about keeping you in the loop.


#1377

I have Bill Bergman at Olson and Burns in Minot, ND. I think he’s good and the firm has great reputation in the area.

He is currently working on curative issue for me. Whomever you chose, be prepared for it to take at least twice as long as you think it should. That’s just the nature of the beast in ND right now.


#1378

All of the good attorneys already have more work than they know what to do with. Since you are going to want someone good, you will have to get to the back of the cue and wait. Be careful about the fact that many of the firms represent oil companies, not owners, and there are some that are astonishingly clueless about the the potential conflicts of interest in representing owners and oil companies. If they ever have to choose, you can be sure the owner will the one who will get dumped and or screwed. You need to ask about this.


#1379

This is helpful…thanks so much.


#1380

Larry Stevens, did they just start paying you? The Gustafson has been producing since at least 11-2012. As for the vertical wells, the ones with no line from the dot, they could be on as little as 40 acre spacing and you would have to own in that particular 40 acres to be due royalty.