Oil and gas lease Divide county - North Dakota

Oil and Gas Leasing Help
1

We own a property in North Dakota, this is inherited for many years ago.

Now we got a letter from a company who will drill at our property. We have no idea what to do, is this a good or bad deal?

Does anyone have proposal for what we could do?

Please see attached letter we have received:

letter1.jpg

letter2.jpg

2

Kurt:

From the information that was provided, the following is my opinion of this offer: 1) The royalty appears low as I would ask 20% 2) The bonus/acre appears low......In May 2011 (State Mineral Auction), Titan Resources was the successful bidder on acreage in T161;R102 at $1800 and $1500/acre. Keep in mind, the bonuses paid at State Auctions are generally higher than the amount you will recieve and the lease is for a five year period. 3) I would not consider leasing for more than 3 years. The five year lease is too long as many things can change in the area over an additional 2 year period. Looking at your area on the GIS map, there is well permitted on the Section just North of your area but appears widespread drilling has not yet occurred in the area. One problem with your lease is the small amount of net acreage you possess as the more acreage owned will sometimes put you in a better negotiating position. Finally, do your homework about the contents of an oil and gas lease, all of which can be found on this website. Hope this information helps.

3

You have gotten very good advice so far.

Being somewhat personally familiar with the physical location of your mineral acres, I have the following to add:

  1. If you haven't already, try to make contact with some of the other surface owners in the general neighborhood of where your minerals are located. Most surface owners in that area generally also have some mineral acres also, Perhaps they will be willing to share what they might have personally leased for, and/or what they have heard others have leased for. And perhaps not, since they might be reluctant to share their personal financial details, as is common in those sparsely populated areas.
  2. If they won't share details on price per acre, at least try to get them to tell what company that they leased with, the number of years of the lease, extensions if any, and whether the lease contained a pugh clause.
  3. Unless the company they mention, is the same company as has contacted you, you will have been given a lead to contact another company to see if they are interested in leasing your acres.
  4. If the company name mentioned by a neighbor is the same company (as has already been in contact with you), contact them and simply ask: Is that your best offer? No harm in asking.
  5. If all the above fails, then consider accepting their offer as is, because you have a minor amount of acres.

My answer assumes that you don't have any other mineral acres besides the 2.07 A.