I have been offered 800.00 an acre for a top lease on this land from a company called transcontinent oil. I was told that I could possibly get around 1500.00 an acre from a company called Blanca Peak Energy. The problem is that Blanca doesn’t check out. Has anyone had any dealings with either company? Does the 800.00 seem like a good price. Thanks Jackie
Jackie:
First, I have heard of Transcontinent Oil but had no dealings or knowledge of their operations. I have never heard of Blanca Peak Energy but my guess is that both are lease brokers and just trying to get leases at a steal in order to make bucks on a flip. Second, I think $800/acre is extemely low for Dunn County minerals as this county has lots of acres in proven production. Looking at the public lease auction in May 2011, the acreage was leasing from $5200 - 2200/acre. Third, when is your lease expiration date? If that date is nearing soon, I would begin to shop around and accept nothing less than 20% royalty with a lease term of no longer than 3 years along with Pugh clauses in place. Keep in mind, you probably won't get the bonus amounts paid at the public aution but it will give you a base price to shoot for in your negotiations.
Jackie, 7 months ago I negotiated $3k signing bonus with Kodiak, Northern Energy Corporation was offering $2200 in T148 R93. I haven’t heard of a big decline in rates so they may be even higher now. I don’t know how well the oil co’s like your township, but don’t sell yourself short. There is information here on Blanka Peake in the Stark county group. Mr. Mallory gave sound advice above. Good luck.
charles s mallory said:
Jackie:
First, I have heard of Transcontinent Oil but had no dealings or knowledge of their operations. I have never heard of Blanca Peak Energy but my guess is that both are lease brokers and just trying to get leases at a steal in order to make bucks on a flip. Second, I think $800/acre is extemely low for Dunn County minerals as this county has lots of acres in proven production. Looking at the public lease auction in May 2011, the acreage was leasing from $5200 - 2200/acre. Third, when is your lease expiration date? If that date is nearing soon, I would begin to shop around and accept nothing less than 20% royalty with a lease term of no longer than 3 years along with Pugh clauses in place. Keep in mind, you probably won't get the bonus amounts paid at the public aution but it will give you a base price to shoot for in your negotiations.
Jackie, It might be worth contacting a few companies and inquiring if they are interested. I know that Continental Resources, Marathon Oil, and Anschutz Exploration/Ansbro Petroleum operate in that area. Maybe you can get offers from a few companies to make an offer and compare them.
jackie wolff said:
Charles thanks for the advise I do not know what Pugh clauses are could you help me out with this. My minerals are not up for lease until Nov 2011
charles s mallory said:Jackie:
First, I have heard of Transcontinent Oil but had no dealings or knowledge of their operations. I have never heard of Blanca Peak Energy but my guess is that both are lease brokers and just trying to get leases at a steal in order to make bucks on a flip. Second, I think $800/acre is extemely low for Dunn County minerals as this county has lots of acres in proven production. Looking at the public lease auction in May 2011, the acreage was leasing from $5200 - 2200/acre. Third, when is your lease expiration date? If that date is nearing soon, I would begin to shop around and accept nothing less than 20% royalty with a lease term of no longer than 3 years along with Pugh clauses in place. Keep in mind, you probably won't get the bonus amounts paid at the public aution but it will give you a base price to shoot for in your negotiations.
Jackie:
In short, Pugh Clauses forces the lease holder to release all acreage not included in a regulatory unit, or force the release of zones uphole or downhole of zones that are producing. Example, if the lease holder drilled a Bakken Formation well with a Pugh Clause in place, then you would be able to negotiate a new lease for the Three Forks Formation which lies beneath the Bakken. In the absence of a Pugh Clause, this lease would be held by production and the operator would be able to drill the Three Forks using the same lease agreement.
jackie wolff said:
jackie wolff said:Charles thanks for the advise I do not know what Pugh clauses are could you help me out with this. My minerals are not up for lease until Nov 2011
charles s mallory said:Jackie:
First, I have heard of Transcontinent Oil but had no dealings or knowledge of their operations. I have never heard of Blanca Peak Energy but my guess is that both are lease brokers and just trying to get leases at a steal in order to make bucks on a flip. Second, I think $800/acre is extemely low for Dunn County minerals as this county has lots of acres in proven production. Looking at the public lease auction in May 2011, the acreage was leasing from $5200 - 2200/acre. Third, when is your lease expiration date? If that date is nearing soon, I would begin to shop around and accept nothing less than 20% royalty with a lease term of no longer than 3 years along with Pugh clauses in place. Keep in mind, you probably won't get the bonus amounts paid at the public aution but it will give you a base price to shoot for in your negotiations.