Ron,
I would keep the option to renew out. They will do something like pump water to hold your lease to say it is in production. Plus, why just give them the option. Do not limit yourself to one company or to terms that could hinder your future. They should have to come back to the table and start over if they fail. Most of these townships are going to be drilled soon, and the boom is heading south...
Ronald M Gall said:
Jody, thanks for that perspective. Actually, the leasing agent started at $300 per acre back in June. The ante was increased, I think, mostly because my two cousins and I have adjacent interests and are pooling.
What is your opinion about a 3 year lease with an option to renew?
Ron Gall
jody kuntz said:
The leasing activity in Hettinger county is really starting to pick up, mainly due to the high gas pressure that lies in the area. Chesapeake is the main company that wants to drill there, but there are a few others getting ready to delve. If they offered you $550/acre, you can get them to $1000 easily. You are holding the ace.
Ronald M Gall said:
My two cousins and I have been offered to lease our mineral rights for $550 per acre in Hettinger County. Is $550 per acre a reasonable offer? It is a three year lease with an option to renew for another three years. Twenty years ago, we leased for about $10 per acre.
Thanks in advance for any information anyone has about leases in Hettinger County, North Dakota.
Ron
Ron:
I would also advise to omit the renewal option from the lease. This option is not at all beneficial to the mineral owner. I think it is wise to only negotiate for the primary term as the value of your minerals may increase during the length of the primary term and this extension clause would only allow the lesee to "lock in" the bonus for whatever period was agreed on. Also, a shorter primary term might be an incentive for getting your area drilled sooner.
Thanks again for the reply, Jody. Another person on this forum also suggested to delete the renewal option, so I'll consider that a consenus.
What is the "bonus" about? I hear the term a lot but don't really understand what it is. Is it an amount I would get just to sign a lease in addition to the amount per acre?
jody kuntz said:
Ron,
I would keep the option to renew out. They will do something like pump water to hold your lease to say it is in production. Plus, why just give them the option. Do not limit yourself to one company or to terms that could hinder your future. They should have to come back to the table and start over if they fail. Most of these townships are going to be drilled soon, and the boom is heading south...
Ronald M Gall said:
Jody, thanks for that perspective. Actually, the leasing agent started at $300 per acre back in June. The ante was increased, I think, mostly because my two cousins and I have adjacent interests and are pooling.
What is your opinion about a 3 year lease with an option to renew?
Ron Gall
jody kuntz said:
The leasing activity in Hettinger county is really starting to pick up, mainly due to the high gas pressure that lies in the area. Chesapeake is the main company that wants to drill there, but there are a few others getting ready to delve. If they offered you $550/acre, you can get them to $1000 easily. You are holding the ace.
Ronald M Gall said:
My two cousins and I have been offered to lease our mineral rights for $550 per acre in Hettinger County. Is $550 per acre a reasonable offer? It is a three year lease with an option to renew for another three years. Twenty years ago, we leased for about $10 per acre.
Thanks in advance for any information anyone has about leases in Hettinger County, North Dakota.
Ron
Thanks, Charles. I hadnāt thought about shortening the length of the lease. It sounds like the drilling activity is heading more south toward Hettinger County these days.
charles s mallory said:
Ron:
I would also advise to omit the renewal option from the lease. This option is not at all beneficial to the mineral owner. I think it is wise to only negotiate for the primary term as the value of your minerals may increase during the length of the primary term and this extension clause would only allow the lesee to "lock in" the bonus for whatever period was agreed on. Also, a shorter primary term might be an incentive for getting your area drilled sooner.
Ron,
They refer to the payment of the lease per acre as the "bonus", which is essentially why you want a short term lease, otherwise if they produce, that is the only bonus payment you shall ever receive. You main terms and conditions are your royalty percentage, depths, etc. Hence, it is a bonus to the landowner to sign that lease for the cash.
There are so many questions that the average person does not know, and that is why I feel we really need to have some townhall educational meetings to help the mineral owners and surface owners make the best decision, plus there is power in numbers with these guys....
Ronald M Gall said:
Thanks again for the reply, Jody. Another person on this forum also suggested to delete the renewal option, so I'll consider that a consenus.
What is the "bonus" about? I hear the term a lot but don't really understand what it is. Is it an amount I would get just to sign a lease in addition to the amount per acre?
jody kuntz said:
Ron,
I would keep the option to renew out. They will do something like pump water to hold your lease to say it is in production. Plus, why just give them the option. Do not limit yourself to one company or to terms that could hinder your future. They should have to come back to the table and start over if they fail. Most of these townships are going to be drilled soon, and the boom is heading south...
Ronald M Gall said:
Jody, thanks for that perspective. Actually, the leasing agent started at $300 per acre back in June. The ante was increased, I think, mostly because my two cousins and I have adjacent interests and are pooling.
What is your opinion about a 3 year lease with an option to renew?
Ron Gall
jody kuntz said:
The leasing activity in Hettinger county is really starting to pick up, mainly due to the high gas pressure that lies in the area. Chesapeake is the main company that wants to drill there, but there are a few others getting ready to delve. If they offered you $550/acre, you can get them to $1000 easily. You are holding the ace.
Ronald M Gall said:
My two cousins and I have been offered to lease our mineral rights for $550 per acre in Hettinger County. Is $550 per acre a reasonable offer? It is a three year lease with an option to renew for another three years. Twenty years ago, we leased for about $10 per acre.
Thanks in advance for any information anyone has about leases in Hettinger County, North Dakota.
Ron
Buddy, we should maybe talk about this business a littleā¦
Buddy Cotten said:
At $85K per acre, I can be out by 5 tomorrow. Keep the tractor.
Buddy Cotten
Mineral Manager
I agree that some meetings would be very educational. The problem for us is that we live in Hawaii, so the distance would be prohibitive for us.
Ron
jody kuntz said:
Ron,
They refer to the payment of the lease per acre as the "bonus", which is essentially why you want a short term lease, otherwise if they produce, that is the only bonus payment you shall ever receive. You main terms and conditions are your royalty percentage, depths, etc. Hence, it is a bonus to the landowner to sign that lease for the cash.
There are so many questions that the average person does not know, and that is why I feel we really need to have some townhall educational meetings to help the mineral owners and surface owners make the best decision, plus there is power in numbers with these guys....
Ronald M Gall said:
Thanks again for the reply, Jody. Another person on this forum also suggested to delete the renewal option, so I'll consider that a consenus.
What is the "bonus" about? I hear the term a lot but don't really understand what it is. Is it an amount I would get just to sign a lease in addition to the amount per acre?
jody kuntz said:
Ron,
I would keep the option to renew out. They will do something like pump water to hold your lease to say it is in production. Plus, why just give them the option. Do not limit yourself to one company or to terms that could hinder your future. They should have to come back to the table and start over if they fail. Most of these townships are going to be drilled soon, and the boom is heading south...
Ronald M Gall said:
Jody, thanks for that perspective. Actually, the leasing agent started at $300 per acre back in June. The ante was increased, I think, mostly because my two cousins and I have adjacent interests and are pooling.
What is your opinion about a 3 year lease with an option to renew?
Ron Gall
jody kuntz said:
The leasing activity in Hettinger county is really starting to pick up, mainly due to the high gas pressure that lies in the area. Chesapeake is the main company that wants to drill there, but there are a few others getting ready to delve. If they offered you $550/acre, you can get them to $1000 easily. You are holding the ace.
Ronald M Gall said:
My two cousins and I have been offered to lease our mineral rights for $550 per acre in Hettinger County. Is $550 per acre a reasonable offer? It is a three year lease with an option to renew for another three years. Twenty years ago, we leased for about $10 per acre.
Thanks in advance for any information anyone has about leases in Hettinger County, North Dakota.
Ron
I believe the many of us are in the same boat as we live in areas which are located far away from the Bakken. It would great if in the next couple of years, we could have a mineral owners convention, possibly in Williston, ND.
By that time, there should be an adequete number of hotels avaiable. I think this would be attended by many of the individuals on this board.
Thanks again, RW. We don't need the cash right now, so we can negotiate (along with my 3 cousins who own adjacent mineral rights).
Maybe you or Jody can answer another question my wife and I are talking about. How does the surface owner get compensated when the machines go on their property to test? For example, if the surface owner has the land planted in wheat, I assume his/her crop will be damaged by the equipment. So the surface owner must get some kind of compensation.
What if the surface owner does not want the equipment on his/her property? Does that void the mineral rights lease?
I sure appreciate your opinions as I am not educated on this stuff.
Ron Gall
r w kennedy said:
Ronald, the option is a no win for you, the mineral owner. $550 doesn't sound unreasonable considering present activity in Hettinger but it can change, hopefully it will go higher. Best to check with anyone local you can find in the forums, and don't be in too big of a hurry if you don't absolutely have to have the cash right now. If contacted I would want to negotiate the royalty before the bonus. Do your best to hold out for 20% at least. Good luck.
Jody,
I will be happy to talk about this business as much as you want.
jody kuntz said:
Buddy, we should maybe talk about this business a little...
Buddy Cotten said:
At $85K per acre, I can be out by 5 tomorrow. Keep the tractor.