Sell or Hold Mineral Rights

We (other family members), each own mineral rights in T156N R97W Sec 19 (1/6 interest), T156N R98W Sec 97 (3/16), and in T156N R98 Sec 24 (1/6).

We recently received 3 offers to sell our mineral rights after Hess took out permits for 5 additional wells on the Section 19 property. We negotiated for all our mineral rights for $6,750/acre. All three parcels have one well and produce approx. 1,000 brls/month each. Does the offer sound reasonable? There’s also rumors that 5 more wells will be drilled on one of the other properties, but it’s just a rumor at this time.

I’m a little skeptical about selling but the other family members are in a rush to sell (each of us are acting individually).

There are a couple more items that concern me.

The offer agreement states closing shall take place before 60 business days from our signing. They say as of now nothing would be closed and paid until 2019. Both the other offers 1-3 weeks closing. Then, when I said for tax purposes I’d sell 50% in 2018 and the remainder in 2019 (Purchase Sale Agreement) they seemed confused. Later said it could be done. Also, very reluctant to send notarized deed.

Thanks for reading my rambling, hopefully it’s get some helpful answers.

Since 2014 the 7 Wells in our area has produced about 10.000 USD pr acre, and that is in the low Ball WTI years…

They drilled our well in december of 2009 and we have acres in the high water mark and in the low water mark and since then have never received a cent from any of it and its pumped over 300,000 barrels of oil…its time for someone to do something and get these people off of their behinds

I cannot comment on the price, but if that is the first offer, it may be low. Did your first well multiplied over five more wells give you more or less than the $6750 per acres? You will probably have to pay capital gains tax, so take that into account. You do not have to sell all of your acres. You can sell part and keep part and spread your risk.

Regarding the time line. It is late October already. 60 business days takes you into mid January. I never send a deed or a lease without getting a check. That timing sounds like they are trying to flip it and have not done their title search yet. A third party can hold your deed and not hand it over until they get the check for you.

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Thank you for your response. We had 3 seperate buyers offers. One quoted for Sec 19 only at 6000/acre and didn’t even counter when told they’d need at least 10% more. Another one quoted for Section 19 only at 5067 but after neqotiating their final offer was for 5500/acre for all acres in the 3 parcels.

The highest offer is 6750/acre. Their original quote was an individual price per parcel with a weighted average price of 5150/acre. Then it went to 5800,6500 and finally the 6750/acre for all acres, a 31% increase over the weighted average price of their 1st offer.

Yes, know there will be capital gains tax, that is why I’ve asked to sell 50% in 2018 and remainder in 2019 (waiting to see if they’ll accept that, declined me once already). Also will have to pay a 3.8% Investment tax in both years. Know I can sell individual parcels.

Didn’t quite understand your question "Did your first well multiplied over five more wells give you more or less than the $6750 per acres? Could you explain?

Thank you

When you are considering selling, you have to consider the future value of any pending or potential wells. For example, if you already have production from one well, then depending upon the totals that you have gotten from it and how long it has produced, you might compare that value per acre to what the new wells might be and then decide whether you want to sell. For example, if your first well has given you $10,000 over four years and you have 5 acres, then you have made $2000/ac. Five more wells might make you about $50,000 more depending upon price of the products. That would mean that five acres might be worth $12,000/ac plus future production. If someone offered me $5000 an acre to buy, then I would not be interested.

Many times when there are future wells pending, buyers will swoop in and try to buy the acreage up at a low price hoping that the owners do not know about the future wells. Just trying to give you another point of view as to what your thought process might be.

I see two permits in 19-156N-97W Go-Abbott-156-97- 1918H-1 Go-Elvin Garfield-156-97 1918H-1 Both permitted in 2011. Are you gettin paid on the Elvin? How many net acres in 19? It has cumulative production of 134,758 bbls oil and 293,926 mcf gas

I see permits for the Go-Ron Viall 156-98- 2524H-2 and the 2524H-3. in 25& 24 of 156N-98W Also a Ron Viall 1-25H. I am assuming you are being paid on the 1-25H. Which one are you getting paid on? How many net acres? Cum oil is 198,235 bbls and 404, 613 mcf gas.

What is your other one on 156N-98W? Sec 97 doesn’t make sense (your middle one at 3/16) I am trying to get a sense of what the first wells production was like and how that might impact the future value. Do you know which section might have the new wells?

The other thing that you might consider is that technology has improved quite a bit since 2012 when these wells were drilled and newer wells are generally doing much better than the older wells.

You are smart to slow down and think this through.

Also, if you look on the ND oil and gas site, can see that just about three miles south of you, ever section has about eight wells each. The Bakken is coming alive again. I was just in a ND minerals owners meeting yesterday at the NARO (National Association of Mineral Owners) national meeting and the ND president had exciting news about the activity and how many wells are pending.

Thanks again. I have had a Basic subscription to the ND Oil and gas site for 11 years. the line of multiple wells are plentiful just south of our wells. Will respond to your previous reply yet tonight.

We all (other family members) each have net 19 acres in well #21931, GO-Elvin Garfield 156-97-1918H, 14 net aces in well #19316, Bergstrom 2-27H, 156N R98W Sec 27, and 27 net acres in Ron Viall 1-25H, T156N R98W Sec 24. A total of 60 net mineral acres Getting paid on all of them.

Five new permits were taken out in September on GO-Elvin Garfield, well#s 35437-35441. Can only figure 4 1/2 wells as our share on one well will be halved as it must be shared with the section next to it, as it will drilled almost on the section border and by ND Law is must be shared. Apparently they feel the oil is also being drawn from section next to it.

There is also a rumor that 5 additional wells are to be drilled on the Viall property 156N 98W Sec24 but just a rumor at this time.

I did what you said and it would take roughly 5.5 yrs to recoup the $6750 offer per acre on the 4.5 additional Garfield wells. Should also note that is on the gross. Hess is taking nearly 28% off gross for expenses on this property. Know there are other considerations. Yet, the offer is 6750 for all 60 acres, not just the Garfield Mineral rights.

Now, when am I considering to sell. The company we’re dealing with would like us to sell tomorrow! Some of the family members are in a rush to sell. I’m not. Tomorrow will find out if they will let me sell 50% in 2018 and remainder in 2019. They declined it once already. With their 60 business day close it may not be able to happen. Once again, that closing time is very suspicious to me. Also asked them to give me their best offer on each individual property. In addition, will be giving them a clause to have an attorney hold title until money is received. Should be an interesting day. No matter what is done I may not sell.

Gosh, once again I rambled on. Hope I answered all your questions and REALLY appreciate all your help.

6 wells in one spacing unit was put into production in 2015. The first back in Sept. 2012. Production so far (Sept) 2018: 1.961.000 BBLS Oil. We had so far got around 11.000 USD pr. acre. If it was in the 70 USD WTI price, then we would had been over 20.000 USD. And rumors tells us, that they are planning 5 more wells. We have one well in our other spacing unit, and last week CLR told us, that they are planning 11 wells in the section. EURs since 2011 has improved dramatically and first year production the same.

Lars, Thanks you for your response. Would you be so kind to tell what area you are referring to?

Personally, there is no way I would go for that 60 days.

153 99 sect 03,10,15 maybe somewhat closer to The core area, but you have The Brooklyn area just south, so…

Is the fractional interest(s) you mentioned above what you own individually, or is that shared among your family members? How many acres is on the table?

Doing the math just based on the legals (you mentioned) gives a acreage total of 354. The number is assuming the fractional interest is based on a full section (640 acres). I don’t know what you own.

Based on the sales price of $6,750.00 the total amount is around $2.3M. if you are sharing the sales price with multiple family members selling is something you might reconsider.

I was offered 10,000 per acre in Williams Co. I turned it down because when I did the math on wells that were being drilled I would get that much per acre in a little more then a year. This was based on wells drilled by same company in the spacing unit next to me. This does not even take in to consideration the additional wells needed to fully develop. It seems to me you are giving away your minerals at that price.

We did the same math. If you really dont need the money, then keep the minerals. Back in 1962 my grandmother tried to sell her minerals acres for 5 USD pr. acre, but nobody wanted to buy.

we are also at 1/6 30 years ago dad sold 2 out of 3 percent ORRI for 40 K we have been offered over 2 million for the remaining 1% not selling it for awhile… just think about it.


Keep in mind that any infill wells you have drilled on 153-99-Sec. 15 will be developed on 2560 acres versus 960. You might have increased activity at some point, per CLR, but will be proportionately reduced. I imagine timing will be the biggest issue here, as CLR and other operators seem to be content waiting for the ordinary high water mark issues to fully play out. The sections to the south, going into the river, are what will make up the balance of the 2560 acre spacing.

Case 27196 and 27197 Dec 20 has unitization of the Long Creek area. We already know the new decimal after the 5 spacing units has been united. Got all the papers from CLR and the plan to drill up to 56 new wells. The 5 wells “held by production” will be united in a way I still don’t fully understand.

I’ve seen existing HBP wells still united under the unitization agreement but the existing spacing units are not reallocated for ownership purposes.