Received lease - now what?


#1

I inherited a small amount of mineral interests, mostly in OK, and am slowly getting familiar with the process there. A little is in ND and I received a lease in the mail from Resonance Exploration for Bottineau County township 160. Terms are 5 years and 1/6 royalty and 50/acre bonus. This seems low to me; is it? The length seems long; is it? OK lease terms are usually in the 3/16-1/4 (highest) range, with length being 3 years, with maybe a 2 year extension.

Questions:

  1. Is 1/6 royalty in Bottineau Co township 160 reasonable?
  2. Is term length of 5 years reasonable?
  3. If I decide to not sign it, should I inform the company that sent the lease of that decision?
  4. Does ND have a pooling process (like OK) to capture the individuals who didn’t sign?

#2

Hi Liz,

Not sure if you signed the lease. The first thing to be aware of is that every lease is negotiable. In most states, the operator has an incentive to negotiate a lease with the mineral owner rather than force pooling them. It is the same in ND. Don’t ever take the first lease offer. Think about what is important to you and focus on that term (royalty rate vs. lease bonus). As far as force pooling in ND, the statutes are pretty favorable to the mineral owners. In other words, getting force pooled in ND is not a bad thing as the mineral owner will get a minimum royalty rate until the well pays out with a penalty and then will get its full share of production.

Dave Max Royalty