Property with split 'mineral rights' owners

Oil and Gas Leasing Help
1

Our 'mineral rights' are located on property in Burke County, North Dakota.

The property is divided into 4 equal shares. Three of the four groups have signed a 5 year 'gas and oil rights' lease on the property.

What happens to the group who have not signed the lease?

2

Unleased mineral owners in North Dakota have 3 options:

  1. Lease
  2. Participate in the drilling and completion of any proposed well under ND Admin. Code 43-02-03-16.3.
  3. Non-Consent - An operator will pay the unleased mineral owner’s share of interest then force pool the interest through the NDIC - The non-participating owners DO NOT get 1/4 of production. They will be penalized cost + 50% penalty on their interest. The operator seeking the risk penalty can either pay them the average weighted royalty until payout or 16% until payout. After payout and 50% risk penalty, the unleased owner now becomes a full working interest owner in the well.

If 3/4 of you have signed a lease you now hold the tract as “co-tenants” - NDCC clearly states that a co-tenant cannot prohibit any other of their co-tenants from egress or ingress. Even if 1/4 of you signed there’s still enough to drill. However, should the remaining 1/4 be an interest that is a significant part of the spacing unit an operator may not want to carry that cost burden and may not drill the well.

3

I must also say, I did call Bowbells home for about two years of my life in “the business.” I still think of the Ozone Burger every once in a while when heading out to lunch :wink:

4

John, Thank you so much for your reply. I hope the other reply I gave did not mail and now I am sending another but I seemed to have lost my reply so here goes again.

  1. The landman contacted me and I told him to send me a contract. He asked me for info on all the names of the mineral rights owners on my late grandfather’s 380 acre farm. I emailed the info and never heard from him again.
  2. My aunt got a contract, signed it and I think has received her lease money.
  3. I was not concerned before as I thought I would receive 100% royalties after the expenses of the well and drilling was paid. Now your reply has me worried.
  4. Do you think I should contact the landman to find out why I did not receive a contract? I didn’t think his offer was that great… $500 per acre for a 5 year lease with 17% royalties. The way I looked at this offer was really $100 per acre and a very small royalty.

John Burman said:

Unleased mineral owners in North Dakota have 3 options:

  1. Lease
  2. Participate in the drilling and completion of any proposed well under ND Admin. Code 43-02-03-16.3.
  3. Non-Consent - An operator will pay the unleased mineral owner’s share of interest then force pool the interest through the NDIC - The non-participating owners DO NOT get 1/4 of production. They will be penalized cost + 50% penalty on their interest. The operator seeking the risk penalty can either pay them the average weighted royalty until payout or 16% until payout. After payout and 50% risk penalty, the unleased owner now becomes a full working interest owner in the well.

If 3/4 of you have signed a lease you now hold the tract as “co-tenants” - NDCC clearly states that a co-tenant cannot prohibit any other of their co-tenants from egress or ingress. Even if 1/4 of you signed there’s still enough to drill. However, should the remaining 1/4 be an interest that is a significant part of the spacing unit an operator may not want to carry that cost burden and may not drill the well.

5

I would be interested to have you share what you have learned as just today I mailed in the paperwork for 1/4 interest on 6400 acres in Burke County. I am from Idaho and have some knowledge but still learning like if they lease per acre 1 price and if they drill and hit it’s another separate pay deal? Or contract per barrel split. We have mineral rights to 10 miles so my guess is I need education.