Good Morning,
Thank you all for the posted information. Six of us hold equal shares in 26.6 acres in Mckenzie County @ T151N,R102W,Sec 35 NE1/4. We have been offered $700 and 3/16 on a standard oil and gas lease form.
We realize this is a very small parcel and wonder if we should contact an attorney in ND. We noted your discussion re: Vertical Pugh clause otherwise it would appear that our offer is pretty normal for the area. Any suggestions greatly appreciated.
Bxorocks
I think that is really a pretty good offer. We are right in that same area only on sec 17 & 20. We received a lease back in Dec. of last year… actually the old lease was still good until April of this year, so don’t know why they did that. We received $250 an acre with 3/16. Then they had an oil well on it in Jan., so then they claimed they could go back to the original lease and we only got 1/6. We often wonder also if we should go thru a laywer on these leases. Good luck!!
They often top lease in order to ensure that they can drill and everything is tied up when they have a rig available. Sometimes when a rig becomes available they decide where to drill based on when the leases expire and the royalties involved. In your case, they are correct in that they drilled under the original lease and the subsequent lease never takes effect… the $250 an acre bonus is a freebie to you, an insurance policy for them that you don’t lease out from under them before they have a chance to drill. It’s hard not to wish they would wait for the better lease to kick in and is the reason why it is to our advantage to keep the length of the lease to 2-3 years.
Bonnie Simons said:
I think that is really a pretty good offer. We are right in that same area only on sec 17 & 20. We received a lease back in Dec. of last year… actually the old lease was still good until April of this year, so don’t know why they did that. We received $250 an acre with 3/16. Then they had an oil well on it in Jan., so then they claimed they could go back to the original lease and we only got 1/6. We often wonder also if we should go thru a laywer on these leases.
Good luck!!
Thanks Dorothy for the explaination. We are constantly learning about these mineral rights, but I find it really interesting and have enjoyed learning whatever I can.
Dorothy Johnson said:
They often top lease in order to ensure that they can drill and everything is tied up when they have a rig available. Sometimes when a rig becomes available they decide where to drill based on when the leases expire and the royalties involved. In your case, they are correct in that they drilled under the original lease and the subsequent lease never takes effect… the $250 an acre bonus is a freebie to you, an insurance policy for them that you don’t lease out from under them before they have a chance to drill. It’s hard not to wish they would wait for the better lease to kick in and is the reason why it is to our advantage to keep the length of the lease to 2-3 years.
Bonnie Simons said:I think that is really a pretty good offer. We are right in that same area only on sec 17 & 20. We received a lease back in Dec. of last year… actually the old lease was still good until April of this year, so don’t know why they did that. We received $250 an acre with 3/16. Then they had an oil well on it in Jan., so then they claimed they could go back to the original lease and we only got 1/6. We often wonder also if we should go thru a laywer on these leases.
Good luck!!
Thanks Bonnie. We are moving ahead slowly and appreciate any information.
Bxorocks
Bonnie Simons said:
I think that is really a pretty good offer. We are right in that same area only on sec 17 & 20. We received a lease back in Dec. of last year… actually the old lease was still good until April of this year, so don’t know why they did that. We received $250 an acre with 3/16. Then they had an oil well on it in Jan., so then they claimed they could go back to the original lease and we only got 1/6. We often wonder also if we should go thru a laywer on these leases.
Good luck!!
Dorothy,
A belated thank you. We all feel this is a good offer and the Landman has been very informative. FYI, The company we are dealing with is Petro-Hunt LLC.
Bonnie Simons said:
Thanks Dorothy for the explaination. We are constantly learning about these mineral rights, but I find it really interesting and have enjoyed learning whatever I can.
Dorothy Johnson said:They often top lease in order to ensure that they can drill and everything is tied up when they have a rig available. Sometimes when a rig becomes available they decide where to drill based on when the leases expire and the royalties involved. In your case, they are correct in that they drilled under the original lease and the subsequent lease never takes effect… the $250 an acre bonus is a freebie to you, an insurance policy for them that you don’t lease out from under them before they have a chance to drill. It’s hard not to wish they would wait for the better lease to kick in and is the reason why it is to our advantage to keep the length of the lease to 2-3 years.
Bonnie Simons said:I think that is really a pretty good offer. We are right in that same area only on sec 17 & 20. We received a lease back in Dec. of last year… actually the old lease was still good until April of this year, so don’t know why they did that. We received $250 an acre with 3/16. Then they had an oil well on it in Jan., so then they claimed they could go back to the original lease and we only got 1/6. We often wonder also if we should go thru a laywer on these leases.
Good luck!!
You are welcome and thanks for sharing your offer info with the rest of us. I have acreage in the next township. Their offer may seem pretty good compared to the last lease but the market has changed over the past couple years and I would not hesitate to ask for 20-25% royalty. 3/16ths is not bad; it is the new floor of what is acceptable in that area and may be just fine for you depending on how much time and effort you want to spend on leasing. Petro-Hunt has a reputation for low-balling people, especially out-of-towners. You may want to take another look at their standard lease form. It is probably the one that they have altered to fit their terms, even though it has the standard o&g producers form 88 printed on it. It is not one that I care to sign and it often leaves me in the position of marketing my acreage to other landmen or oil companies that will accommodate my terms.
Our family has mineral rights nearby. At the end of 2010 or the start of 2011, do you or any other forum member think an offer of $1,000 per month and 4/16 on a standard oil and gas lease form is attainable, too low or too high?
HI Tom,
This is one of Bruce’s relative’s, I assume your a relation to Phil. We accepted the $700 and 3/16 from Petro-Hunt LLC. From the research we did it appeared to be a good offer for the area. We have not seen a $1000 offer in the area but given the price of oil they may want to secure the lease. Let us know how you make out and good luck.
Bob Daly
Our family has mineral rights nearby. At the end of 2010 or the start of 2011, do you or any other forum member think an offer of $1,000 per month and 4/16 on a standard oil and gas lease form is attainable, too low or too high?
Nice to meet you, Bob, I remember Bruce very clearly. My brother, two sisters and I are Phil’s children and have mineral rights shares like you do. We never really knew who made up the pieces of the whole, so this is interesting. Maybe we can email privately to put all those pieces together and discuss how we might collectively better position ourselves at renewal time. I will be representing my siblings and have not yet signed with Petro-Hunt, though that will likely happen soon. What do you view as the priorities in dealing with Petro-Hunt, the per-month amount, the 3/16 or 4/16 share or the length of the contract, ie. 2 years vs 3 years?
Tom,
I assume you meant $1000/acre rather than a month. It may be attainable, we have been offered $1000/acre with 3/16RI recently. 4/16 (25%) is really really hard to get although one of my relatives has been able to get that in the past, I think by taking a bundling approach with other acreages. 1/5 (20%) is more likely but is still like pulling teeth, it seems. We will take a hit on bonus money if we have to in order to get at least 20%, but that is just our family’s preference.
Please let us know how you make out with your negotiation. If you can get together with Bob, it should be to all of your advantage in negotiating.
Dorothy
Thomas R. Owens said:
Our family has mineral rights nearby. At the end of 2010 or the start of 2011, do you or any other forum member think an offer of $1,000 per month and 4/16 on a standard oil and gas lease form is attainable, too low or too high?
Hi Dorothy, nice to meet you as well. Yes, I did mean $1,000 per acre per month, but didn’t make that clear, thank you. Your point of bundling is what I was getting at in my comment to Bob Daly. With all of us being divided up in small pieces and unfamiliar with on another do put us at a disadvantage in dealing with the mineral companies. Of course we do not want to spoil opportunity for our country or for ourselves, but we do want a “fair” partnership. I will let you know via this blog on what we wind up settling. Maybe over time we can make up a map of the area with the contract settlements for each area, that would be most helpful. I feel like I am reinventing the wheel right now. Thanks, Tom
Hi Tom,
My wife is Chris Rogers Daly (Bruce’s niece via his brother John). The other five of our group are all Blair Rogers children. Chris and I still live in the Portage area, in fact for many years we lived a block away from your old home at Franklin and Dunn. Please send an email to dalyrjandcr@frontier.com.
Regards,
Bob
Nice to meet you, Bob, I remember Bruce very clearly. My brother, two sisters and I are Phil's children and have mineral rights shares like you do. We never really knew who made up the pieces of the whole, so this is interesting. Maybe we can email privately to put all those pieces together and discuss how we might collectively better position ourselves at renewal time. I will be representing my siblings and have not yet signed with Petro-Hunt, though that will likely happen soon. What do you view as the priorities in dealing with Petro-Hunt, the per-month amount, the 3/16 or 4/16 share or the length of the contract, ie. 2 years vs 3 years?