Sinclair Oil & Gas Lease Offerings in Dunn County ND

General Mineral Rights Discussion
1

I was just sent by Sinclair an Oil & Gas lease offer T146N, R-97W, Section 19 Dunn County ND and need some advice from the wonderful people on this forum.

I inherited this years ago and found out last year that a producing oil well (Porcupine 1-19H) Little Knife was on this site for over 3 years. I contacted Sinclair and provided proof that I owned it and they were nice enough to send me the back royalties even though the will was not probated in North Dakota at that time. Since then the will was probated the end of last year in ND and I provided Sinclair with copies of the ND Probate and Deed update.

I did not have a lease with Sinclair so I was getting paid a non_consent 16% royalty is my guess. Now they just sent me this lease to sign today. I own Gross Acres: 648.80 Net Acres: 4.9984 (NMA). The terms of the offer are 3 Years (HBP), Bonus Consideration $500/Acre x NMA $2499.25, Royalty Interest: 3/16ths = 18.75%

QUESTIONS:

1- Why is Sinclair sending me a 3 year Lease and Bonus Offer at this time if their is a producing oil well that I am being paid on (16% non-consent)?

2- Is 18.75% royalty and $500/Acre Bonus the going rates?

I would think 20% Royalty and a much higher bonus on a producing well?

Point of Information:

My understanding is that this first well was drilled as a test well and their may be future plans to put more wells on the site. Their are issues on selling the gas produced from the well I was told.

2

Bruce,

I wouldn't be in any big hurry to sign the lease. I 'd want to know more about the well's production numbers. I think they have to offer you a chance to participate in the well. Having a signed lease puts them in a better financial position. Your in a pretty good situation right now to negotiate your terms.

Rick

3

Richard I agree with you on their is no rush. I am trying to figure out why the 3 year lease offer? I am already being payed on non _ consent due to the original pooling before the well was drilled or am I wrong? Was hoping someone here with experience with this could explain this to me.

4

Bruce,

Here are your well's production numbers for the last few months

Rick

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Bruce Wernow said:

Richard I agree with you on their is no rush. I am trying to figure out why the 3 year lease offer? I am already being payed on non _ consent due to the original pooling before the well was drilled or am I wrong? Was hoping someone here with experience with this could explain this to me.

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Richard Radke said:

Bruce any lease term would be meaningless. Any lease would be held by production.

Rick

Bruce Wernow said:

Richard I agree with you on their is no rush. I am trying to figure out why the 3 year lease offer? I am already being payed on non _ consent due to the original pooling before the well was drilled or am I wrong? Was hoping someone here with experience with this could explain this to me.