Royalties through pooling legislation

Hi,

my name is Andy Lill. About a year ago my father, brother and i received seperate oil and gas lease contracts from the Conoco Phillips Company for are land/mineral rights in McKenzie County, NorthDakota. (Township 152 North, range 95 west, 5th P.M. Section 2:W2SW) This was a suprise since non of us knew that we owned anything in North Dakota! We waited about 7 months for verification of ownership from the McKenzie county courthouse, to find that we owned a whopping 1/4 acre apiece (yeah!).

Seeing how this was not involving Oprah money we did not seek a lawyer or proffesional guidance. My father signed the lease which seemed fair (3/16 royalty). However my brother and I did not because in researching leasing information it came to are attention that there is a possibility of receiving 100% royalty if we were involved through pooling legislation.

One week ago I was notified that the well was successful and the operation has changed hands to Hess Oil. I contacted Hess Oil and found that i'm going to receive a royalty check for approximately 1/16?! I thought that was weird because I never signed a lease agreement.

So what i'm asking is, did I take the right course of action or did I miss the boat? Should I ask for a lease? And if so, what should I expect or ask for taking into consideration that the well is good?

-the royalty challenged

I think you misheard and that you will receive 16% cost free royalty, until your portion of the well plus penalty is paid for. I/6th is only 16.67%, but 3/16 is 18.75%. I doubt your monthly checks will be significantly smaller although the first check, which will be payment for more than one month may be.

So when my portion of the well is payed up and penalties what kind of royalties could i expect?

r w kennedy said:

I think you misheard and that you will receive 16% cost free royalty, until your portion of the well plus penalty is paid for. I/6th is only 16.67%, but 3/16 is 18.75%. I doubt your monthly checks will be significantly smaller although the first check, which will be payment for more than one month may be.

Nobody can say at this point. The well and penalty could be paid off in a year, or it might take ten years. Nobody knows how many bbls of oil per day will be produced or what the price of oil will be then. I do know that you will receive the weighted average of what everyone else who did lease, or 16%, whichever the operator elects. I have property myself in McKenzie co and am very sure that the average would be higher than 16%. The 1/4 acre won't make you rich, but you are entitled to be paid for the minerals produced from it.