Tim and all,
Again, my usual disclaimer "I do not know Shale" but find the "adventure" fascinating. Could be a legit statement about test wells this year, but when going to the MT website showing permitting and drilling information;
http://www.bogc.dnrc.mt.gov/WebApps/DataMiner/Wells/Wells.aspx
I don't see that Shale Exploration has applied for, or been approved for, any permits at this time. I may be looking at something incorrectly, but they should have something they can use to back up their claim. It is great if they are drilling but if so, why no permits yet? But this is precisely the kind of questions you'd ask Shale representatives. They may have another company drilling? or another company that would be registered as the producer/owner? But this is what they should be able to provide a mineral owner that asks. Perhaps they are looking for a partner that will provide the drilling/producer side if the relationship.
Just don't know.
Wilson
Most of these landmen have no control over when drilling happens and in my opinion, I think most of them re-sell the leases they acquire. We have had land under lease before and nothing happened but look whats going on in the Baken in ND, In time they will drill wherever they can get oil and gas. Show me the money!
Yes, Show me the money! I agree; that's our (MO's) dream!
I have known first hand people that have leased because they have been told that their parcel would be the site of a well for sure and then - nothing. So MO's just need to be cautious about promises - especially verbal. In fact, forget about anything verbal. If it isn't in the lease contract, it isn't anywhere. So if someone promises they will drill on your property as part of the lease agreement have the details documented clearly; including penalties for not meeting terms of agreement. The problem with these kinds of deals is if you have to take legal action against a gas/oil company it is very hard to outlast their legal defense budget. Many landowners spend money then run out of money before a case is settled or a case is lost earlier and there isn't funds to adequately appeal.
So proceed with caution. Basically forget promises of future drilling - but hopefully we will all be part of drilling action and part of the royalty cash flow some day. Sadly, a small percentage of leases ever end up in a productive DU.
But here's hoping! It's real when it is real though; Marcellus, Bakken, etc. etc.....
Wilson
Absolutely...show me the money! More importantly show me the oil! I am flying to Billings on Monday and driving out to Scobey to meet with Shale Exploration. I read someone taking $60 bonus to get a 15% royalty. That's an interesting approach. It certainly presumes drilling. Since all this, it's the first I've heard of a landman. I gather they have no authority on drilling and will tell you most anything to get people to sign. This is exactly why I am going out there to see what is going on. I will be able to get a good feel on this and will post my experience. I'm on an adventure!
We will be interested in your report when you return, my grandfather from Denmark homesteaded in MT, north of Scobey, I still have family there.
Don't let having an office there fool you, I can open an office in a day or two and shut it down just as quick.
Best Regards,
Tim
I think everyone is over-estimating the meaning I attach to a company having an office. I am looking for evidence of a company that will drill for oil on my minerals. Having an office is ONE piece of evidence. Of course I will need more evidence to convince me they are drilling. So far, however, there is more evidence that Shale Exploration will drill for oil than any of the other companies that are leasing in Daniels County where my acreage is. If anyone has any evidence that another company will drill, please post it. I want to thoroughly analyse my decision on what company to go with.
Ted: Look at the royalty as well as the bonus. The 2.5% difference in what Shale is offering (1/8) vs the 15% that others are offering is enormous. Don't forget the dynamics of leasing. Operating companies want compact, contiguous areas, not scattered hither and yon. When they have the area leased that provides the
area they are looking for they stop leasing. WE leased with a land man that had no office in Daniels County--in fact, they were in Colorado. We did not know who they were working for until AFTER we lease our minerals. The company has 24,000 gross(19,000 net) acres leased in Daniels. As they are among their newest leases, they probably won't be drilled on for a while. Kind of like FIFO inventory accounting. Since they are a publicly traded company, I can follow them via their web site as well as their SEC filings and presentations at analyst meetings. Hopefully they will drill and find multiple gushers--in the mean time , I'm keeping my day job. Good luck in your search for a leasing company.
Ted Rothstein said:
I think everyone is over-estimating the meaning I attach to a company having an office. I am looking for evidence of a company that will drill for oil on my minerals. Having an office is ONE piece of evidence. Of course I will need more evidence to convince me they are drilling. So far, however, there is more evidence that Shale Exploration will drill for oil than any of the other companies that are leasing in Daniels County where my acreage is. If anyone has any evidence that another company will drill, please post it. I want to thoroughly analyse my decision on what company to go with.
Yes...I definitely want as much of a royalty as I can get, but for it to mean anything, they have to drill. I am on a quest to find out who is going to drill for oil the soonest and anyone with any concrete information needs to post it here for all of us.
I actually called my friend's friend who is an attorney who has done oil and gas work in Texas. He says they have to make a unit which permits the company to drill in a certain area. So yes...that makes sense with what you are saying that they would want to lease up everything in certain areas to make a unit to drill. Also, I think Wilson mentioned something about drilling permits and I am thinking that must have to do with units. I found this:
http://www.mtrules.org/gateway/ruleno.asp?RN=36.22.702
Has anyone heard of a company Open Range Ventures, LLC out of Idaho I think. HA! another LLC.
That's why they get a 5 year lease.....they will drill when they will drill. I saw a site somewhere listing landmen in Montana. Call one of them . He will be able to fill you in on the process. A quick drill would be more a function of blind luck than great planning. No company is going to announce to a prospective lessor thay are going to drill immediately and run up the cost of acquiring additional acreage. Nope-don't know Open Range. Good luck and keep posting
.
Ted Rothstein said:
Yes...I definitely want as much of a royalty as I can get, but for it to mean anything, they have to drill. I am on a quest to find out who is going to drill for oil the soonest and anyone with any concrete information needs to post it here for all of us.
I actually called my friend's friend who is an attorney who has done oil and gas work in Texas. He says they have to make a unit which permits the company to drill in a certain area. So yes...that makes sense with what you are saying that they would want to lease up everything in certain areas to make a unit to drill. Also, I think Wilson mentioned something about drilling permits and I am thinking that must have to do with units. I found this:
http://www.mtrules.org/gateway/ruleno.asp?RN=36.22.702
Has anyone heard of a company Open Range Ventures, LLC out of Idaho I think. HA! another LLC.
I get the impression that Shale Exploration has been planning this for quite some time, but I could be wrong. I will find out when I get there next week.
All:
I'm a landman with some interest in the MT play. Not working the area but happy to share what I can about the process. 9 out of 10 times the O&G company will hire a 3rd party broker to acquire mineral acreage. The O&G company will insist on confidentiality for the purposes of obtaining a position quietly before their competitors can gain a foothold. I've worked several plays and it's always the same. One O&G company comes in and quietly leases what they can hoping to close out the competition and gain control. Once the O&G company thinks they have a strong enough land position they will tell the land broker that it's ok to share with the land/mineral owners who is leasing there land/minerals. It's a catch 22 because in order to be competitive the oil company has to get as much done without letting on it's business intentions to it's competitors, but the secrecy does tend to breed suspicion. There are smaller "speculators" who find out about the "big guys" intentions and come in to buy and turn a profit. This isn't always a bad decision because land/minerals can get paid sooner this way but sometimes if the speculator can't sell the lease he'll walk away from the deal. If you have more questions about terms to include in your lease or negotiating tips feel free to contact me or post here. Happy to help if i can.
To WM Brinkerhoff- My family has interest in Brinkerhoff wells in Sheridan WY, your relations? Thanks for information.
FYI to All: 2/6/12 offer from Shale Exploration- T-34 R-44 Sec.7 & 8 Daniels CO. 5yr. $150/acre, 1/8 Royalty, for 4net/320acres. Family has +/- 55 net acres, abutting in Sec. 7, 8 & 17 of T34-R44. No other offers at this time.
Hi Louise - Yes the very same! - small world - like to visit with you about Daniels County when you have some time - interested in what's going on up there - talk soon
Kind of sounds like going with the bigger company doesn't always pan out either.
Wilsontownship said:
Ted,
It also takes more then an office in town to be legit. Here is an article from Jan 2011 where an office had been set up for leasing in Michigan in 2010 and it can blow away in the wind just like a bad lease deal. In his example, it was Chesapeake using shell companies and landman firms to lease and then bail and cancel. So again, point is an office doesn't mean legitimacy.
http://morningstarpublishing.com/articles/2011/01/05/leader_and_kal...
Wilson
As I understand it, Shale will be drilling their first test wells around June 1st. In fact, Shale appears to be the only company in Daniels County with a drilling program lined up. My uncle went with Shale and he's real excited. Good luck.
Ted Rothstein said:
I think everyone is over-estimating the meaning I attach to a company having an office. I am looking for evidence of a company that will drill for oil on my minerals. Having an office is ONE piece of evidence. Of course I will need more evidence to convince me they are drilling. So far, however, there is more evidence that Shale Exploration will drill for oil than any of the other companies that are leasing in Daniels County where my acreage is. If anyone has any evidence that another company will drill, please post it. I want to thoroughly analyse my decision on what company to go with.
Steven,
If Shale is planning on drilling in June they should have a permit by now, but I can't find one. And yes, big and small companies, deals can go bad and that is precisely why I encourage people to be cautious and thorough as best they can.
Wilson
Steven Smith said:
As I understand it, Shale will be drilling their first test wells around June 1st. In fact, Shale appears to be the only company in Daniels County with a drilling program lined up. My uncle went with Shale and he's real excited. Good luck.
Ted Rothstein said:
I think everyone is over-estimating the meaning I attach to a company having an office. I am looking for evidence of a company that will drill for oil on my minerals. Having an office is ONE piece of evidence. Of course I will need more evidence to convince me they are drilling. So far, however, there is more evidence that Shale Exploration will drill for oil than any of the other companies that are leasing in Daniels County where my acreage is. If anyone has any evidence that another company will drill, please post it. I want to thoroughly analyse my decision on what company to go with.
I wouldn't go with a company offering better terms that plans to flip a lease to the driller-that seems high risk in an already risky business. I am now in Scobey. I have met with Shale on several occasions. Seismic crews were in and out of the office while I was there. The people at Shale showed me a map where they have leased over 308,000 acres in the 900,000 acre county. I now understand that it takes 1280 acres to form one of these units to drill and get a permit. Shale believes the entire county is over oil and with horizontal drilling, it doesn't matter so much where they drill. Therefore, if Shale doesn't already have 100% of the minerals in that unit, they will find a 1280 acre area in which they do have the required acreage to make a unit and drill there. So, even if there is some sort of a secret deal like was referred to above, it still makes sense to go with the bigger, more established company like Shale, in my mind. Please prove me wrong before I sign this lease.
I met with a girl at Shale. She is very knowledgeable and they know of these other companies out there making offers. Some of them had no compete contracts with Shale Exploration and supposedly there is pending litigation regarding all that. As far as I can see, that means that any minerals leased to those other companies will not get drilled. I don't want to get involved in all that while other people are getting rich with oil gushing from below because they leased with the drilling operator in the area and I leased with some upstart company trying to ride Shale's coat-tails. When did these other companies form and are they licensed to do business in Montana? Please legitimize the other companies so I can sign with them if they are going to drill for oil. I see no evidence that these other companies are going to drill, but I keep hearing on this forum to not sign with Shale. I am thoroughly confused.
It is beautiful country here. If you come, make sure you get here on Wednesday so you can go to the Ponderosa for Mexican night. They have an awesome smothered burrito.
Ted,
I applaud your effort - you are being very thorough and that is great. Did you ask Shale if they have every drilled before, if they currently have any active wells anywhere or if they have permits for any of the drilling they plan on doing in Daniels County?
If the answer to all of this is NO, it doesn't mean to walk away, it just means this is their first role as producer. I have read about their history on the Internet and it doesn't appear to include drilling. So you need to confirm that. Next if it is their first rodeo, how are they staffing it and how are they financing it? Perhaps they will be hiring a driller or they will be partnering with a producer. Try to understand that clearly.
Finally, if you sign, just ask them to give you a company check the day you give them the signed lease; don't use the bank draft or similar payment methods.
Good luck, it might just be legit, ultimately it is up to each landowner to decide. Did you ask them if they were leasing on their behalf or could they sell/flip or JV.
Keep at it and good luck. Keep us posted.
Wilson
Ted & Wilson,
Maybe I'm a heretic but I don't lose much sleep worrying over who takes the lease. To me the most important things are dealing with someone I trust, securing the best terms possible (financial & lease language), ensuring I get the bonus payment before delivering a signed lease, then letting things run their course. As a result I've signed directly with oil companies (A), with brokers on behalf of companies (B), and with speculators (C) whom I know hope to flip my lease.
If "C" offers $200 with 1/5th, and "A" offers $100 with 1/8th, I'll sign with "C". If $200 is the best offer I could find, then I don't worry if they turn around and sell it elsewhere for $400 and carve out an override for themselves. There is nothing wrong with them taking a risk and making a profit (or not). Occasionally I've leased to an oil company who later "flipped" it to another. We (mineral owners) don't know who will end up with our lease, nor do we know when, or even if, it will ever be drilled. Those factors are out of our control. Don't be misled into thinking that leasing with "A" over "C" will ensure your minerals will be drilled.
Now Ted, with that said, I'm not suggesting you don't lease with Shale Exp.. They may be the best one to lease with. I am just offering my opinion after doing this for many years. Re-read what I posted above; Start with "someone I trust" then seek the best terms you can find. Make your best call, then after that, relax and be patient.
Daniels County is still a wildcat situation. Many hope there is oil across the area but that is yet to be proven. Regardless of whom you lease with, your minerals might not be drilled, nor find any oil if it is. So don't diminish the value of taking your best option when leasing it. Good Luck.
Ted: Go to the Clerk and Recorder's office in the court house and inquire who has been leasing and how much they have leased. All those leases have to be filed in the Court House. The girl you spoke with reminds me of someone from SDC Montana who tried to get me to lease in 2010 for the same $150/ac and 1/8 royalty. The guy told me my biggest problem would be counting my money. They disappeared with no warning. I didn't sign with them then, and I would be skeptical of $150/ac today as well. I don't have the site address here at the house, but will post it Monday--it posts each Friday all the drilling permits issued in the state. I have been following it for a long time and saw only one permit issued in Daniels Co. If Shale has leased one third of all Daniels Co they've issued @ $46 million in bonus checks. Have you spoken to anyone who has received one of those checks? Glad to know the Ponderosa is still there! There was another place across the street called the "109". In fact, there were 7 bars and a population of @2000. It's beautiful country and some good people too. Gil and Mary Jo Hammer, Ferris Mohn and his son Terry(can't remember his brother's name.) Tommy Davis was a county Commissioner. Good Folks.
Ted Rothstein said:
I wouldn't go with a company offering better terms that plans to flip a lease to the driller-that seems high risk in an already risky business. I am now in Scobey. I have met with Shale on several occasions. Seismic crews were in and out of the office while I was there. The people at Shale showed me a map where they have leased over 308,000 acres in the 900,000 acre county. I now understand that it takes 1280 acres to form one of these units to drill and get a permit. Shale believes the entire county is over oil and with horizontal drilling, it doesn't matter so much where they drill. Therefore, if Shale doesn't already have 100% of the minerals in that unit, they will find a 1280 acre area in which they do have the required acreage to make a unit and drill there. So, even if there is some sort of a secret deal like was referred to above, it still makes sense to go with the bigger, more established company like Shale, in my mind. Please prove me wrong before I sign this lease.
I met with a girl at Shale. She is very knowledgeable and they know of these other companies out there making offers. Some of them had no compete contracts with Shale Exploration and supposedly there is pending litigation regarding all that. As far as I can see, that means that any minerals leased to those other companies will not get drilled. I don't want to get involved in all that while other people are getting rich with oil gushing from below because they leased with the drilling operator in the area and I leased with some upstart company trying to ride Shale's coat-tails. When did these other companies form and are they licensed to do business in Montana? Please legitimize the other companies so I can sign with them if they are going to drill for oil. I see no evidence that these other companies are going to drill, but I keep hearing on this forum to not sign with Shale. I am thoroughly confused.
It is beautiful country here. If you come, make sure you get here on Wednesday so you can go to the Ponderosa for Mexican night. They have an awesome smothered burrito.