Need advice-Mineral Rights/Fairview,Montana-will they drill?

My family owns mineral rights to approx. 77 acres of land just outside of Fairview Montana, and we have been contacted by a Landman to sign a Paid Up Oil and Gas Lease. My Question: is it beneficial to seek out one landman as opposed to another-are some landmen connnected, whereas, others are not.

I notice that recently XTO and some other Big Boys have been active in our area, and I am concerned that this lease will be business as usual-In the past 30 years we have signed lesses, and subsequest to signing the lesses, no drilling.

Question: is there anyway I can slant the lease our way to require drilliing?-It seems like our mineral rights get tied up for 3-5 years without any progress whatsoever.

Now that most members my family are getting older, of course like everybody else, we would like to benifit from drilling, and not just empty promises. In the past some of the landmen have stated that they will be drilling within 180 days, and it turned out to be BS.

Can anyone give me some advice?

Thanx, Jim Calder

jamescalder@verizon.net

Dear Mr. Calder,

The most common way is to require a drilling obligation with liquidated damages for non performance.

HOWEVER, with only 77 acres, you have an impossibly small (IMHO) opportunity to get that clause accepted, unless the operator already had a drillable prospect on your lands

A drilling provision within a lease is very difficult to get. My suggestion is to sign a 3 year lease, or if your family members are looking to recieve a “payday” for their minerals rights, consider selling a portion of the minerals.

Since a drilling schedule usually follows the lease schedule, it is a pretty good chance that a rig would not move onto your property unless the leases are held by a drilling company, not a nonop company, and moving towards a tale end of the lease. Most of the operations in ND are following the lease schedule…meaing the rig is moving to the DU’s that have a majority of expiring leases and are on the hit list for the company.

Mat Ekblad, RPL

Hi Jim, I liked your questions as I own oil and mineral rights in Dunn County, ND and have leased them twice and my mother leased them twice before she died. So, I have wondered many times if the drilling company I leased with is actually planning on drilling or just sit on the lease in order to keep it for “possibly someday” or to prevent another company from leasing and drilling on it. I wish I knew how to find out more about their intentions. If you find a way of getting answers, let me know too. Sharon

Hi Sharon,

I tell ya, it hard to figure out. Looks like we will be contacting a lawyer for advice. In the meantime, I talked to the landman and he disclosed the company he is working for, and it is a oil and gas exploration company which is on the Stock Exchange. At least we know who we are dealing with/or think we know. It was interesting that, according to him, they want to do a Bakken well, which according to him, will require 2 sections of land running north to south. Apparently there is operating well approx. 1.25 miles away from our property, just over the North Dakota line. We hope they are coming our way/that may be why they have tied up, as much as they can, in the 2 sections. Fortunately, or unfortunately, we have a very small interest in what the Montana OIl and Gas Commission may deem as a unit. However, anything is better than nothing.

I have read some of the questions on the forum, and may be a good idea to find out who you are dealing with. Is it a Oil and Gas Company? or a middle man? or speculator? This may give you a clue of whats going on. Additonally, where are the closest wells to your property?, and who are the owners/operators. You may want to contact them.

A geologist did mention to me that sometimes when they hit a “gusher” LOL/trickler/a profitable well, they immediately will turn off the tap, so they don’t have to report the well as producing, and send their landmen out to sign up every available mineral rights lease they can in the area. Interesting to me.

There is such Big Money involved here, that is difficult to get the insider information. Apparently one of these wells can cost 5-8 million + research and be immensly profitable/oil at $80.00/barrel. But if you can follow the money/where are the operationg wells/whos pumping, you may get a better idea.

There is a lot of information available on the government web site: try: dms.nd.gov/oilgas/ operating wells/well permits/names of companies that are drilling, locations, etc.

Ultimately, I am still trying to figure it out.

Jim Calder

Sharon Rainey said:

Hi Jim,
I liked your questions as I own oil and mineral rights in Dunn County, ND and have leased them twice and my mother leased them twice before she died. So, I have wondered many times if the drilling company I leased with is actually planning on drilling or just sit on the lease in order to keep it for “possibly someday” or to prevent another company from leasing and drilling on it.
I wish I knew how to find out more about their intentions. If you find a way of getting answers, let me know too.
Sharon

Hi Buddy,

Thank you for your advice.

JIm Calder

Buddy Cotten said:

Dear Mr. Calder,

The most common way is to require a drilling obligation with liquidated damages for non performance.

HOWEVER, with only 77 acres, you have an impossibly small (IMHO) opportunity to get that clause accepted, unless the operator already had a drillable prospect on your lands

Best,

Buddy Cotten
www.cottenoilproperties.com

Hi Mat,

We have spoken on the phone before, and thank you for your advice/input.

Jim Calder

Mat Ekblad said:

A drilling provision within a lease is very difficult to get. My suggestion is to sign a 3 year lease, or if your family members are looking to recieve a “payday” for their minerals rights, consider selling a portion of the minerals.

Since a drilling schedule usually follows the lease schedule, it is a pretty good chance that a rig would not move onto your property unless the leases are held by a drilling company, not a nonop company, and moving towards a tale end of the lease. Most of the operations in ND are following the lease schedule…meaing the rig is moving to the DU’s that have a majority of expiring leases and are on the hit list for the company.

Mat Ekblad, RPL