Oil and Gas Lease Offer

North Dakota Mineral Rights Stark County, ND
1

I have received an offer to lease Section 9-139N-98W in Stark County, North Dakota. The leasing company is Murfin Drilling, Inc. Need advice on 2 things.

  1. Is anyone familiar with Murfin?
  2. They have given 2 options for lease. 1) $200/mineral acre bonus with a 1/8th royalty provision. 2) $100/mineral acre bonus with a 1/6th royalty provision.

I have 3 other sections and Section 2 is currently leased by Morningstar and have had activity there since 2010.

I’m trying to get advice on the market value and if this is a fair lease. I feel like it is low but not sure what is happening in that area. Thank you in advance for your assistance.

2

You may want to reach out to @M_Barnes since North Dakota may have some notice issues relating to OGL offers. Murfin has been around for quite some time.

3

Most savvy mineral owners would want the second option at 1/6th, but ask for 3/16ths and see what they say.

4

Do you think the $100/mineral acre is a good value? And thank you.

5

Thank you, James. Appreciate your input.

6

They are also requesting a 5 year lease. I’ve read that it’s best to only do 3. Do you have any input?

7

Personally, I always ask for more money and a shorter time frame. So $150 at 1/6th or $100 at 3/16ths and three years. They may not agree, but you don’t know until you ask.

8

I’ve managed to completely confuse myself. Can you explain why the $200/mineral acre with 1/8th bonus is not higher? It appears to me to have an initial larger payout. I had it mapped in my head and realized the $150 at 1/6 comes out the same in the royalty bonus as the $200 at 1/8th. What am I missing?

9

I think longer term. The 1/8th and $200 bonus is a one time payment for the three year or five years. If I have a productive well or multiple wells, then I would rather have many years of payout at 1/6th instead of 1/8th since 1/6th (0.16666667) is larger than 1/8th (0.125). The bonus payment is very small compared to lifetime payout especially with multiple wells. The risk is that they never drill, then the 1/8th is better for a one time payout.

10

Thank you so much for the clarification. I’m back on track. At the end of the day it is, indeed, all a risk but I need to look long term.

11

So the landman has become very snarky. He has offered another section with what I suggested at 150/mineral acre with 1/6th royalty. I asked for a 3-year lease with option to do 2 additional with another bonus. He has agreed to 150 for all sections at 1/6th but 5-year lease. I need guidance moving forward. I’m not opposed to 5-year lease but feel I should have the option for bonus payout… am I wrong? Murfin is new to ND market and has some new lease in Dunn County.

12

I think you are right. 3-year with option. They may not be the only ones interested. So don’t be afraid to push a little.

13

Thank you. So far we have no other offers and I know Murfin is new to North Dakota. I think I need to hold firm but have fear of missing out (FOMO). I guess if I stand my ground it may be only then they counter.

14

Is there somewhere I can look to find out how many mineral acres I have in Stark County, Section 4-139N-98W? Thank you.

15

You would need to either find a deed or probate and hope that the acres would be listed on it. If you have producing acres, then you can ask the Division Order analyst for the operator.

16

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