We own the mineral rights to two sections: Township 151 N, Range 101W Sections 15 and 22. Our three yr lease ended last month and we have received offers to buy our oil rights. There have been wells drilled in the area but am not aware of any production.
Does anyone have any information regarding the value of these oil rights in this area of McKenzie County?
Mr. Moses, you have 4 producing wells right now. One of the wells was producing in October 2012 which should have put your lease into the secondary term, for as long thereafter as oil or gas is produced. The IP's on the wells are excellent, from a glance ranging from 1,800 to 3,150 bbl oil. If you have good title you should be getting paid reasonably soon. There can be delays for title work, sometimes as much as a year but the first check from 4 good wells after a year with interest (if you have marketable title) would be a doozy. I would not sell your acres if they were mine for even $10,000 per acre. If you are still inclined to sell I would suggest that you at least collect the first royalty check and then sell if you still want to. You wouldn't want someone to buy your acres with a large part of the money being money that was already owed to you, now would you?
You own the minerals on two whole SECTIONS and there are FOUR producing wells that just went online? Holy Toledo, no wonder the sharks are out looking for chum, or should I say CHUMPS? If it were I, just for fun I would counteroffer with something ridiculously high, say $100,000 per acre. When they say, "But sir, that is just totally unreasonable," I would respond with something like, "Hey, man, we all got our bills to pay. Get back to me soon, please, because I just made on offer on a Caribbean island. Thanks alot."
Mr. Kennedy,
Wow! Thank you for the amazing information! Amazing that we have not heard from anyone about the production. We were wondering why there were no offers to another lease and all the offers to buy our mineral rights. We are totally new to this whole process. I am assuming that we'll need to get in contact with the Oil Drilling company to find out where we are on receiving royalties.
I have been viewing some of the activity on the NDIC Oil & Gas maps...etc. but have yet to find production information. Well, We certainly will take selling the mineral rights off the table and look forward to the process of getting royalty checks. Thanks for your valuable input!
r w kennedy said:
Mr. Moses, you have 4 producing wells right now. One of the wells was producing in October 2012 which should have put your lease into the secondary term, for as long thereafter as oil or gas is produced. The IP's on the wells are excellent, from a glance ranging from 1,800 to 3,150 bbl oil. If you have good title you should be getting paid reasonably soon. There can be delays for title work, sometimes as much as a year but the first check from 4 good wells after a year with interest (if you have marketable title) would be a doozy. I would not sell your acres if they were mine for even $10,000 per acre. If you are still inclined to sell I would suggest that you at least collect the first royalty check and then sell if you still want to. You wouldn't want someone to buy your acres with a large part of the money being money that was already owed to you, now would you?
Thank you Mr. Wrench ,
Really appreciate the information. We are, obviously, new to this whole process. Had no idea that there were producing wells....subject to royalties.
Our job now will be to get in contact with the drilling company to find out where we are in receiving royalties. Looking forward to this discovery.
Thanks again.
Pete Wrench said:
You own the minerals on two whole SECTIONS and there are FOUR producing wells that just went online? Holy Toledo, no wonder the sharks are out looking for chum, or should I say CHUMPS? If it were I, just for fun I would counteroffer with something ridiculously high, say $100,000 per acre. When they say, "But sir, that is just totally unreasonable," I would respond with something like, "Hey, man, we all got our bills to pay. Get back to me soon, please, because I just made on offer on a Caribbean island. Thanks alot."
A little more in depth. 2 of your wells were drilled from 151-101 section 10 with the wellbores passing through sections 15 and 22.
1. LONNIE 15-22 #2TFH initial production of 1,848 bbl oil showing 6 days production in may 2013
2. LONNIE 15-22 #1H initial production of 3,153 bbl oil showing 11 days production in april 2013
The 2 wells drilled from section 15 and through section 22
1. LONNIE 15-22 4TFH initial production of 1429 bbl oil showing 19 days production in april and 21 days production in may.
2. LONNIE 15-22 3H initial production of 2633 bbl oil showing production from October 2012 to may 2013.
The operator is STATOIL OIL & GAS LP.
The production has been sporadic because there is so much work going on. I regard Statoil as a highly technically competent operator. The price of oil right now is good and it's a great time to have a brand new well that can produce it's very best, 4 brand new wells is even better. Your first check from the LONNIE 15-22 3H is past due and they owe you interest if you have marketable title.
It is not always true but sometimes offers to buy come from the operator through an intermediary, they know how good the wells are before most mineral owners have any idea and as you might guess, it's an excellent time for them to pick up a bargain before you know exactly what you are selling.
Once you start getting paid for the LONNIE 15-22-3H there should be no waiting period for the other wells because they are just more wells drilled on the same lease and the title work would apply to all. Congratulations on 4 good wells.
Timothy,
I advise you to take what RW has to say to heart then think about how it applies to you. Were you my client, I would tell you to wait until you have had at least one year production on each well then hire a petroleum engineer to analyze the production and tell you the discounted value to a legitimate buyer. By then the buyers will have no excuses as to delay, title, etc. and a fair transaction can take place. The buyer is already educated enough to make an opening bid. After a year, and with some help, you will be almost as well educated. I would make a decision to sell on a well by well basis. I'm certain that between wells the first full year production will vary, the decline curves will vary, pressures will vary and therefore the long term potential and potential sale price will vary.
Be assured that the operator is holding all the cards in this game. Wait until you are dealt a few before you play your hand one way or the other and well by well.
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Derrick,
We are not in a position to entertain a lease at this point. We will need to review the royalty situation before making any moves.
Thanks,
Tim
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Gary,
Thanks for the advice and info. We appreciate the input and we will certainly take our time, and collect some royalty checks before making any move.
Tim
Gary L. Hutchinson said:
Timothy,
I advise you to take what RW has to say to heart then think about how it applies to you. Were you my client, I would tell you to wait until you have had at least one year production on each well then hire a petroleum engineer to analyze the production and tell you the discounted value to a legitimate buyer. By then the buyers will have no excuses as to delay, title, etc. and a fair transaction can take place. The buyer is already educated enough to make an opening bid. After a year, and with some help, you will be almost as well educated. I would make a decision to sell on a well by well basis. I'm certain that between wells the first full year production will vary, the decline curves will vary, pressures will vary and therefore the long term potential and potential sale price will vary.
Be assured that the operator is holding all the cards in this game. Wait until you are dealt a few before you play your hand one way or the other and well by well.
Gary L Hutchinson
Minerals Management
R W,
Thanks again for the in depth information. You are obviously well versed in this industry and we are very thankful to have an unbiased opinion and advice on our situation. We have no plans to change anything at this time.
Looking forward to receiving royalty checks and chewing on that for a long time....
Tim
r w kennedy said:
A little more in depth. 2 of your wells were drilled from 151-101 section 10 with the wellbores passing through sections 15 and 22.
1. LONNIE 15-22 #2TFH initial production of 1,848 bbl oil showing 6 days production in may 2013
2. LONNIE 15-22 #1H initial production of 3,153 bbl oil showing 11 days production in april 2013
The 2 wells drilled from section 15 and through section 22
1. LONNIE 15-22 4TFH initial production of 1429 bbl oil showing 19 days production in april and 21 days production in may.
2. LONNIE 15-22 3H initial production of 2633 bbl oil showing production from October 2012 to may 2013.
The operator is STATOIL OIL & GAS LP.
The production has been sporadic because there is so much work going on. I regard Statoil as a highly technically competent operator. The price of oil right now is good and it's a great time to have a brand new well that can produce it's very best, 4 brand new wells is even better. Your first check from the LONNIE 15-22 3H is past due and they owe you interest if you have marketable title.
It is not always true but sometimes offers to buy come from the operator through an intermediary, they know how good the wells are before most mineral owners have any idea and as you might guess, it's an excellent time for them to pick up a bargain before you know exactly what you are selling.
Once you start getting paid for the LONNIE 15-22-3H there should be no waiting period for the other wells because they are just more wells drilled on the same lease and the title work would apply to all. Congratulations on 4 good wells.
Good move. You got some good advice from R. W. and Gary, especially about selling on a well-by-well basis, IF you decide to sell at all. I would be inclined to "ride the wave" if the first year's checks are significant.
My kids own mineral rights in McKenzie County and it is going to Probate this week. They have had leases for the last 5 years. We have been trying to find out if there are active wells, there appears to a horizontal leg running through part of it. The only description I have is -- section 9 township 150 range 98.
Thanks for any information you can provide.
Bonnie, there has been some fairly good production from the ROLFSON 11-16NEH drilled by XTO from section 16 [offsite drilling] with the wellbore passing through section 9 and into section 4. 129,701 barrels oil as of may this year. 307,553 mcf [thousand cubic feet ] of gas produced, something over half of the gas sold and unfortunately much of the gas was flared off. ND gas can be very rich and usually sells for a lot more than the commodity price. If you have more than a couple acres the royalty should pay for the probate.
Bonnie Larson said:
My kids own mineral rights in McKenzie County and it is going to Probate this week. They have had leases for the last 5 years. We have been trying to find out if there are active wells, there appears to a horizontal leg running through part of it. The only description I have is -- section 9 township 150 range 98.
Thanks for any information you can provide.
Thanks!! They have 60 acres.
Bonnie
r w kennedy said:
Bonnie, there has been some fairly good production from the ROLFSON 11-16NEH drilled by XTO from section 16 [offsite drilling] with the wellbore passing through section 9 and into section 4. 129,701 barrels oil as of may this year. 307,553 mcf [thousand cubic feet ] of gas produced, something over half of the gas sold and unfortunately much of the gas was flared off. ND gas can be very rich and usually sells for a lot more than the commodity price. If you have more than a couple acres the royalty should pay for the probate.
Bonnie Larson said:My kids own mineral rights in McKenzie County and it is going to Probate this week. They have had leases for the last 5 years. We have been trying to find out if there are active wells, there appears to a horizontal leg running through part of it. The only description I have is -- section 9 township 150 range 98.
Thanks for any information you can provide.
Mr. Moses,
You better put the pressure on them to get your payments started asp. It sounds like you sure better have a real good CPA and make some financial decisions before the end of the year, then it's too late. You need real good fast tax planning. Also I would get a real good attorney to help you with wills and estate plans. You have a problem that most everyone would like to have.
What ever you do do not even consider selling your interest in anyway. You will regret it. If you still consider it, make them make you written offers and the documents they expect you to sign. It might shock you had good and bad and offer can be. But it will teach you a lot. Also get out of town attorneys and out of town CPA's. It's not good to let them know what you are going to make off these wells.