Question re initial lease payment

I own rights in Divide County, ND and currently have three active leases but no activity yet that I know of. One of my leases was paid at a significantly higher amount (more than 3 times) per acre than the other two leases. I have a general question – is the dollar amount of the initial lease payment any indication of future drilling activity?

Tammy:

The $/acre bonus amounts increase in direct proportion to drilling activity in an area. For instance, in 2008, bonus amounts were going for approx. $100/acre. Currently, the same acreage is going for around $1000/acre and up since the successful drills completed in the Bakken. Most likely, the lease which was paid to you at a higher amount was leased later than the other two. This is one reason to have your lease worded as to where you can re-lease at current amounts instead of the amount on the lease. Divide County is a very active county and should bring top dollar for bonus amounts.

Thank you, that was very helpful. You are correct, the higher amount was for my most recent lease, just three weeks ago. We’re keeping our fingers crossed; hope to see more money in the future. :slight_smile:

charles s mallory said:

Tammy:

The $/acre bonus amounts increase in direct proportion to drilling activity in an area. For instance, in 2008, bonus amounts were going for approx. $100/acre. Currently, the same acreage is going for around $1000/acre and up since the successful drills completed in the Bakken. Most likely, the lease which was paid to you at a higher amount was leased later than the other two. This is one reason to have your lease worded as to where you can re-lease at current amounts instead of the amount on the lease. Divide County is a very active county and should bring top dollar for bonus amounts.

Tammy:

You can go to the North Dakota Industrial Commission website and see what minerals leased for in your area at state auctions. You can get an idea where the really "hot" lease areas are by the dollar figures. I feel that these Western counties in ND will be active for several years to come as currently wells are being drilled (in some areas) to secure leases. Just remember to be patient as there are just a limited number of rigs for a vast amount of acreage to be drilled. We have minerals in Williams County (near the Montana border) and the activity is slowly moving that direction.