MY FAMILY HAS LEASED OUT 45.28 ACRES WILLIAMS ND SECTION 6 AND 7.TRAINGLE USA HAS DRILLED 2 WELLS,LITTLE MUDDY 11H AND LITTLE MUDDY13H.THEY HAVE BEEN PRODUCING OIL SINCE OCT.2013.WE HAVE NOT SEEN ANY CHECKS YET.THEY HAVE PRODUCED OVER 120000 BARRELS OF OIL SO FAR.OUR SHARE IS 22%.COULD YOU POSSIBLY GIVE ME SOME SORT OF ESTIMATAION OF HOW MUCH WE SHOULD BE RECEIVEING.THANKS
Denise:
Several factors come into play when estimating the amount you will receive. First, refer to your lease in regards to transportation charges, etc., another is the price of oil when sold and don't forget that ND taxes will be withheld. I believe that in ND payments must be made within 150 days after the oil and gas is marketed and if not, an 18% interest rate must be paid to the mineral owner. This rule does not apply if there is a dispute over the distribution of royalty payments (royalty ownership/title problems).
Denise, I would be willing to try. 120,000 divided by 1280 = 93.75 bbl oil per acre, times 45.28 acres = 4245 bbl oil attributable to your acres, 4,245 X $85 per barrel (average) = $360,825 X 0.22% royalty = $79,381. Pretty good so far, right? Now there is 11.5% production and severance tax and 4% ND income tax call it 15% = $67,474.
I don't know what you may be charged in post production or marketing costs but they probably aren't more than 2.5% to 3%. If you have them in your lease, take a couple thousand off the estimate. I did not include federal tax because I have no idea of your bracket.
Many operators will wait until the last secong to mail the check. Due to the legal fiction of post, even though it got to you 3 days late, the day they mailed it is what matters. When the oil is sold is more important than when it was produced because it's 150 days after first SALES. They may have not sold any in October if it was a partial month. I believe you are only a couple months away from it being due though. I hope this helps.
R W,
I understand most of your post but where does the 1280 come from?
Earnest said:
R W,
I understand most of your post but where does the 1280 come from?
Earnest, you have a very good point whether you meant to make one or not!
I was preoccupied and didn't even consider that it could have been a 2560 acre spacing. I presumed it was a 1280 acre spacing and I could be wrong although there are alot more 1280 acre spacing than there are 2,560 acre spacings. My fault if it's not a 1280. I will look and see if I can find what size it is.
I see Denise is new here and has never discussed the location of her minerals. I could search for her wells by name but it's alot simpler if I have a legal description.
Ther we go, it's 4 section so it's 2560 acre spacing. I would say cut the $67,464 in half $33,732 is my revised estimate, sorry for any confusion.
The wells are confined to section 6 -154-100 and section 1-154-101. Sections 7 and 12 below them do not have any wells but they are sucking royalty from the sections that do. Maybe sometime in the next 10 years wells will be drilled in the non-producing sections and they will start to pull their weight.
RW,
Thanks for that information. I guess I'm still confused on how royalties work. The 1280 or the 2560 would be the acreage distance between the two producing wells? So the amount produced is divided by the distance to equal out the amounts attributable to each acre receiving royalties? Sorry if this has confused me but I think Denise probably ask the same question.
Earnest, the 1280 acres or 2,560 acres [ 4 sections, a section is a square 1 mile on each side ] is the amount of acreage in the pool / spacing. In ND the spacing is the pool and all who own mineral acres in the pool receive their proportionate share of royalty.
For these extended long lateral wells they drill so many of these days 1280 acres [ 2 sections ] is most common.
Many earlier wells were on 640 acres and they are usually termed long laterals, not extended.
Vertical wells can range from 40 acres up to 160 acres in pool /spacing. There can be short laterals on these small spacings also. I like them and think they generally perform well in relation to their productive length.
I divide total production by the number of acres in the pool spacing and multiply by the number of net acres because I like to know what the production per acre is anyway. Some people would do the calculation by decimal interest, but my way you can see how I arrived at my number, I hope.
I should have specified that the erronious 1280, was acres and didn't and lost part of the audience.
Denise's wells are really close together, you could shoehorn another 20 wells in the 2 sections that actually hold the two wells she has interests in. As I said above, half of her roualty is being siphoned off or will be when they start sending checks, to pay people in another 2 sections who don't have wells so the operator can hold the unproductive acres by "production". Denise will only get half as much money until Triangle drills a couple wells in the unproductive sections. I have spacings myself where I have been waiting for another well to be drilled since 2008. There is a nice lady on this forum who has 14 wells on one half of her 1280 acre spacing. I can't wait to hear that she will be getting another 14 wells drilled on the other half of her spacing. I was not exaggerating about room for another 20 wells.
Earnest, I suggest you start learning to use the NDIC O&G Division site, particularly the GIS server map. There is a wealth of information on the site, much of it free. The greatest part of what isn't free requires a $50 Basic subscription. The premium subscription cost around $170 and all you get beyond the basic subscription is the dull boring Director meetings and notes which you probably don't need unless you are going to pay an O&G lawyer tens of thousands of dollars to challenge something, with the likelyhood that you will still probably lose.
I would suggest you learn the part that was free and then decide if you want to be able to look at the near present and historical production figures for every O&G well in the state, salt water injection included, also coal bed methane. You can also look in the well files and see what went into the drilling of wells. I consider it a bargain at $50, even though Montana gives most of the same information for free. I hope this clears some things up for you Earnest.
Earnest said:
RW,
Thanks for that information. I guess I'm still confused on how royalties work. The 1280 or the 2560 would be the acreage distance between the two producing wells? So the amount produced is divided by the distance to equal out the amounts attributable to each acre receiving royalties? Sorry if this has confused me but I think Denise probably ask the same question.
LITTLE MUDDY 1H AND 13H ARE IN SECTION 6-TOWNSHIP 154 RANGE 100 WEST.ALL OF THIS IS VERY CONFUSING.BUT I GUESS THE CHECKS WILL TELL ME WHAT I NEED TO KNOW,THANKS
Denise, I revised my estimate when I found out you were in a 2,560 acre spacing. As of right now I think you have about $33,732 dollars if your oil sold for an average of $85. That is with state taxes taken out, but not federal. Many people are shocked at how little they realise from leasing.
Denise -Howdy neighbor! I also have an interest in those wells. I spoke to Triangle yesterday and they indicated they anticipate royalty checks to be sent at the end of March or the beginning of April. If you are able to look at the well file, with a basic subscription to NDIC, it appears they plan on starting two more wells in April. It also appears, and I don’t pretend to understand all of it, they are planning on a total of 7 wells so far. Isn’t this waiting game fun? And frustrating? Well, at least it gives is something to look forward to. It’s going to be a wonderful Spring this year!
Suzanne, I hope you get those other wells but the GIS map was updated on the 18th and today and I don't see any sign of permits. The whole 2560 is held by production from the 2 wells, there is no hurry now.
Of course, I have said often enough that permits are meaningless, they can get a permit with a phone call and they have a credit card on record and they can get a verbal approval to start drilling before the paperwork is done. I do think that if they were going to drill more wells in the next year in that spacing they would have the permits as they are only about $100 and can be extended for the same amount, if you find you are wrong and you can't get a well drilled in a year.
RW. -
That’s just what I read in the file. That was their stated plan but we all know not to count on anything when you are a mineral owner. I would call you an expert and I am still pre kindergarten. I defer to you and I always look forward to your more knowledgable responses. Oh, and I am in sec 7 and 12 so I guess I won’t be pulling my weight until we see more Little Muddy wells. Hopefully it will will be sooner rather than later. I have been waiting for my Atlanta wells royalties forever. It seems like about 2 years since Atlanta was first spud. My longest lease, the Little Muddy wells, are going to give me a royalty before my shortest lease, the Atlanta wells. But it is going to be an amazing year when it all comes together.
r w kennedy said:
Suzanne, I hope you get those other wells but the GIS map was updated on the 18th and today and I don’t see any sign of permits. The whole 2560 is held by production from the 2 wells, there is no hurry now.
Of course, I have said often enough that permits are meaningless, they can get a permit with a phone call and they have a credit card on record and they can get a verbal approval to start drilling before the paperwork is done. I do think that if they were going to drill more wells in the next year in that spacing they would have the permits as they are only about $100 and can be extended for the same amount, if you find you are wrong and you can’t get a well drilled in a year.
THANK YOU,NEIGHBOR,YES THE WAITING IS TERRIBLE.BUT WE KNOW SOME DAY,SOME TIME IN THE FUTURE WE WILL BE GETTING A CHECK.THANKS FOR THE IN FO,HAVE A GREAT DAY,DENISE
Suzanne Vohs said:
Denise -Howdy neighbor! I also have an interest in those wells. I spoke to Triangle yesterday and they indicated they anticipate royalty checks to be sent at the end of March or the beginning of April. If you are able to look at the well file, with a basic subscription to NDIC, it appears they plan on starting two more wells in April. It also appears, and I don't pretend to understand all of it, they are planning on a total of 7 wells so far. Isn't this waiting game fun? And frustrating? Well, at least it gives is something to look forward to. It's going to be a wonderful Spring this year!
SO,I GUESS THE LONGER IT TAKES,THE BIGGER THE CHECKS,RIGHT? LOL
Suzanne Vohs said:
Denise -Howdy neighbor! I also have an interest in those wells. I spoke to Triangle yesterday and they indicated they anticipate royalty checks to be sent at the end of March or the beginning of April. If you are able to look at the well file, with a basic subscription to NDIC, it appears they plan on starting two more wells in April. It also appears, and I don't pretend to understand all of it, they are planning on a total of 7 wells so far. Isn't this waiting game fun? And frustrating? Well, at least it gives is something to look forward to. It's going to be a wonderful Spring this year!
Suzanne, my comment was nothing personal, about your sections not pulling their weight. You may be a victim also!
Susanne, it's possible that your lease could expire before your acres are drilled and the lessee would have to pay you a bonus again, and it's certainly possible that with the knowledge you have gained that you could negotiate for 20% rather than the 3/16 royalty that I recall you mentioning. In my opinion they could be cheating you out of many thousands of dollars in bonus and royalty by picking someone elses pocket and paying you half of their royalty, for the production of THEIR oil. You notice I said the operator picking someone elses pocket?
The oil company makes the same amount off the oil, only the royalty paid to mineral owners is split in two.
The state allows the operator to do this to you. The state does not have the best interest of the mineral owners at heart. Why would the state interfere between you and oil companies this way? What part of the public good does it serve that in a private deal between yourself and and an oil company, they will not have to lease you again, pay a bonus AND give you the opportunity to bargain for a higher royalty. Obviously, the state allowing the operator to hold your minerals by taking money from mineral owners whose minerals ARE being produced and sold, is only of benefit to the operator and should not be allowed.
I personally am on both sides of the equation. I don't want to be paid for someone elses oil. Just pay me a fair amount for MY oil that is produced and sold, and don't pay anyone out of my royalty just so you [the operator] can gain a benefit at no cost to you.
I could see it being reasonable if they actually had a timetable they had to stick to, but they don't. In two separate spacings I have single wells drilled in 2007-2008 and never a single well added to them since. These two spacings are surrounded by multiwell units so there is nothing wrong with the Northeastern McKenzie county acres.
Once a spacing is drilled and HBP they need not ever drill another well until those wells are exhausted and can no longer produce, 20-30 years or more.
An operator can make money simply by proving the reserves and holding the property, allowing it to appreciate in value and then assigning all or part to someone willing to meet their price. Those they assign the acreage may not intend to produce it either. Remember you only get paid from production?
I have a friend who showed me the recorded documents of the development loan the operator received for the acres that they leased from her for $2,000 and 20% royalty. The loan for the undrilled, mortgaged acres came to $54,700 per acre. It's worth more than that or the bank wouldn't have loaned the money. Her acres in Mountrail county in my opinion are not as good as your acres because she is not in the best part of Mountrail.
They can make money without increasing production. Where does this leave the lessor mineral owner? You earn money for your minerals being produced, your minerals might gain you something in appreciation but not as much as the operator who receives 81.25% of such benefit. Your appreciating asset has become their appreciating asset and they aren't even paying you full royalty! What a scam. Bernie Madoff would be proud, and the state of ND is a willing accomplice
RW- I agree. Most of us mineral owners didn't know what was happening to us when we were offered leases. I remember, with my first lease, thinking it would expire in five years and then I would be offered another lease, or not. I didn't know I was handing a fortune over to an oil company for a token and FOREVER for Pete's sake! I've learned a lot from the knowledgable contributors on this forum, and especially you. I appreciate how you do your best to help everyone understand all sides of the questions that are asked. I still read questions from newer mineral owners that think the lease has an expiration date. We may get our royalty checks but they don't even compare to what the oil company is getting from the oil we have handed over to them. Now they're holding 4 sections by production, what's next? Six sections? Anyway, I thank all the mineral owners that submit questions and all those that answer them. It helps us all sort it out and learn a bit from each other. r w kennedy said:
Suzanne, my comment was nothing personal, about your sections not pulling their weight. You may be a victim also!
Susanne, it's possible that your lease could expire before your acres are drilled and the lessee would have to pay you a bonus again, and it's certainly possible that with the knowledge you have gained that you could negotiate for 20% rather than the 3/16 royalty that I recall you mentioning. In my opinion they could be cheating you out of many thousands of dollars in bonus and royalty by picking someone elses pocket and paying you half of their royalty, for the production of THEIR oil. You notice I said the operator picking someone elses pocket?
The oil company makes the same amount off the oil, only the royalty paid to mineral owners is split in two.
The state allows the operator to do this to you. The state does not have the best interest of the mineral owners at heart. Why would the state interfere between you and oil companies this way? What part of the public good does it serve that in a private deal between yourself and and an oil company, they will not have to lease you again, pay a bonus AND give you the opportunity to bargain for a higher royalty. Obviously, the state allowing the operator to hold your minerals by taking money from mineral owners whose minerals ARE being produced and sold, is only of benefit to the operator and should not be allowed.
I personally am on both sides of the equation. I don't want to be paid for someone elses oil. Just pay me a fair amount for MY oil that is produced and sold, and don't pay anyone out of my royalty just so you [the operator] can gain a benefit at no cost to you.
I could see it being reasonable if they actually had a timetable they had to stick to, but they don't. In two separate spacings I have single wells drilled in 2007-2008 and never a single well added to them since. These two spacings are surrounded by multiwell units so there is nothing wrong with the Northeastern McKenzie county acres.
Once a spacing is drilled and HBP they need not ever drill another well until those wells are exhausted and can no longer produce, 20-30 years or more.
An operator can make money simply by proving the reserves and holding the property, allowing it to appreciate in value and then assigning all or part to someone willing to meet their price. Those they assign the acreage may not intend to produce it either. Remember you only get paid from production?
I have a friend who showed me the recorded documents of the development loan the operator received for the acres that they leased from her for $2,000 and 20% royalty. The loan for the undrilled, mortgaged acres came to $54,700 per acre. It's worth more than that or the bank wouldn't have loaned the money. Her acres in Mountrail county in my opinion are not as good as your acres because she is not in the best part of Mountrail.
They can make money without increasing production. Where does this leave the lessor mineral owner? You earn money for your minerals being produced, your minerals might gain you something in appreciation but not as much as the operator who receives 81.25% of such benefit. Your appreciating asset has become their appreciating asset and they aren't even paying you full royalty! What a scam. Bernie Madoff would be proud, and the state of ND is a willing accomplice
I , too, am awaiting a royalty check for wells completed in October.
Have you received yours yet. I was thinking this month but nothing. They are drilling 4 more in the same section. Maybe they are waiting until all are completed. Only 2 show "A" for active. I'm just impatient.
I spoke with Triangle yesterday and they said checks will quite possibly be sent this Friday. Not a promise from them but at least a ballpark of when. That should put a smile on your day. I took a deep breath and the air was so sweet. Here’s to better days Deloris and Denise.