Mineral rights lease questions in McKenzie County North Dakota

General Mineral Rights Discussion
1

Hope someone can give me advise on my 18 net mineral acres located in McKenzie County of North Dakota? (Township 147 North, Range 103 West, 5th PM Section 18: NE 1/4)

In the past have agreed to very low lease agreements and as low royalty percentage. Currently lease is up and have only had one offer of $600.00 acre and unknown royalty.

To this date I have never traveled to ND and look at the property but am considering it very soon. How would I locate the property with only the above description? Should I have a consultation with a mineral rights Attorney in the area? Who else could I speak to in that area to get an idea of a fair lease value? or would I just be wasting my time traveling the 8-9 hours to McKenzie County? Any help with these questions would be so appreciated!

Thank You;

Kurt Klosterman

2

Kurt,

There isn't much you can do out there right now and not much to see. Oasis let its two nearby permits expire without drilling and the only active permit (Zavanna) is several miles away. They were all horizontal permits but the closest good production is well over 10 miles away. I think $600/nma for a 3 year 3/16 lease would be attractive if it can't be extended or held by a shallow well. Ask for a detailed proposal and lease form in writing from the offeror. If they want a lower royalty or longer time then get some advise. Use some of the bonus money to clear your title if necessary. Your time will come but it may be 10+ years out.

3

Mr; Hutchinson,

Thanks for your reply. The company that is making the current offer is Momentum Energy. I can find little about them. Have you heard of this company and/or their reputation? And I'm sorry, the offer is $300.00 per acre mineral rights.

Thanks;

Kurt

4

there are more than 5 Momentum Energy listings. What is the rest of the name?

Kurt Klosterman said:

Mr; Hutchinson,

Thanks for your reply. The company that is making the current offer is Momentum Energy. I can find little about them. Have you heard of this company and/or their reputation? And I'm sorry, the offer is $300.00 per acre mineral rights.

Thanks;

Kurt

5

That's all in the name we were given. They are sending out a lease contract for review and possible signing. When received I will inform you of complete name. They want a 3 year contract with an option for a 3 year extension that they can extend if they wish. (same financial terms). And again I apologize, the offer is $300.00 per mineral acre.

Kurt

6

Kurt:

Unfortunately, all of the wells that have been drilled near your place have been sub-economic, meaning they will not produce enough oil to pay back the drilling costs. That's why no one is beating down your door with lease offers. I would accept the $300/acre for a three year lease and ask for at least a 1/6th royalty.

As far as physically visiting the place, I can't think of a bigger waste of your time. You can't tell anything from the surface, and all you want to know about nearby activity is publicly available from the State of North Dakota. If you are just curious about what it looks like, check out the image in the attached file from Google Earth.

2237-Klosterman.pdf (191 KB)
7

Thank you Steve!

Kurt

Steve Durrett said:

Kurt:

Unfortunately, all of the wells that have been drilled near your place have been sub-economic, meaning they will not produce enough oil to pay back the drilling costs. That's why no one is beating down your door with lease offers. I would accept the $300/acre for a three year lease and ask for at least a 1/6th royalty.

As far as physically visiting the place, I can't think of a bigger waste of your time. You can't tell anything from the surface, and all you want to know about nearby activity is publicly available from the State of North Dakota. If you are just curious about what it looks like, check out the image in the attached file from Google Earth.

8

Steve;

Momentum Energy is offering $300.00/acre with 1/6th royalty. They also have an addendum of after 3 years they have the option to extend the contract another 3 years with the same terms. What is your feeling on that?

Thanks;

Kurt

Steve Durrett said:

Kurt:

Unfortunately, all of the wells that have been drilled near your place have been sub-economic, meaning they will not produce enough oil to pay back the drilling costs. That's why no one is beating down your door with lease offers. I would accept the $300/acre for a three year lease and ask for at least a 1/6th royalty.

As far as physically visiting the place, I can't think of a bigger waste of your time. You can't tell anything from the surface, and all you want to know about nearby activity is publicly available from the State of North Dakota. If you are just curious about what it looks like, check out the image in the attached file from Google Earth.

9

Kurt:

The extension option is a little bit stick, but what I wouldn't hold up the deal over it.

Good luck with it.