Hi all. I have really enjoyed reading bits of this forum the last few days and hope that other MO's can help me out or give me advice. I haven't learned enough to even be dangerous yet.
We have a 20 acre lease offer in Township 154N Range 101W Section 28. This is immediately south of Williston near the river.
From hints on the forum I have found one well nearby 21933 that apparently only recently started drilling.
The simple lease terms are $1500/acre 20% 3 years.
We only recently became aware by the coincidence of our own recent family efforts and this contact by Diamond Resources/Continental Resources folks.
I have read of 1280 acre spacings that I assume are two 640 acre sections, but have no idea which adjacent section is part of the 1280 spacing that would include our 20 mineral acres.
I do not know much about the leasing and permitting process. Apparently you can drill in a section regardless of lease status on other acres in the section? What happens at the end of the lease if they have drilled? Haven't drilled? When is the best time to sell the mineral rights if that is my ultimate goal here? TIA
Everett, to start with they started drilling the well 12- 24- 2011. Congratulations, you are about to have a well named Plano 1- 28 H and the field name is Todd. Your section 28 is spaced with section 33 south of it. Land companies tend not to mention little things like an existing well or that a well is already drilling. They get the crazy idea that you might bargain for a better deal, come to think of it...... If I were you I'd be seeking competitive bids for your lease and I'd let Diamond know that you were seeking competitive bids. I and my brother also had a bad experience dealing with Diamond, I recomend that you deal with Diamond by mail and e-mail so you have a record of everything said. Good Luck, and welcome to the forum.
Thanks RW, I was hoping you would reply as I have read many of your posts. So in this case what happens when the three year lease is up? Is there typically another renewable lease bonus along with the continued locked-in share of royalties? This well is a "tight hole", which I gather means secretive at this point. Who is entitled to share the well's information at this point? And again, I am nearing retirement age, when is the best time to sell the mineral rights if that is my ultimate goal here?
Everett, the lease offer you have received will favor the lessee, Continental, to the greatest possible extent, and would lower the sale price of your acres should you sign the lease and then attempt to sell your acres after. Even if your purchaser intended to lease the acres to the operator themselves they will probably think they could have made a better lease agreement than you did, but they would be bound by the terms of your lease. Everett, if you don't lease, I think you have a narrow window of time to sell the acres, possibly at a premium as many people might want to participate in a well that is drilling Right NOW, instead of having their money tied up for years waiting for the well to be drilled. Looking at your area and the wells in it, especially Brighams wells, your area has potential for good producing wells, profitable. I think it is safe to say Continental agrees with me. I also see a very nice Madison formation well near you in section 32 with 216k barrels since 89. It's always nice to have a chance of more than one formation. I think you would receive more money over time leasing than selling, but it would be a good idea to get help with the lease so you would have protective clauses, not least a depth clause, in it and I wouldn't want to have deductions from my royalty for any post production costs, that or more royalty % calculated to offset such costs so the net effect would be the same. I don't think you would have received $1500 acre 20% offer if the well wasn't being drilled now, I think they would go somewhat higher, but it at least is an offer worth considering. There is the carried interest option, you could search my posts and read the Century code on forced pooling to get information on that. Everett, they are going to find oil unless you have the only dry spot in the area. Whatever formations they lease will be held by production, a depth severance clause, releasing formations above and below, would be a must for me. Everett, I wouldn't sell your acres if I had them, but if I were to sell them I would sell them now, when they had their greatest value to a potential purchaser. I think you could expect no more than 4 times your current per acre bonus offer, but there would be no harm in trying. I think the economics would say that you would get at least 1/2 as much money from a good lease in the next two years and possibly exceed the sale price in less than 5 years, and possibly receive checks from this well for another 20 years. This is not even including the possibility of more wells being drilled that would be needed to effectively drain your spacing. I would consider anyone with a mid term (10 years) outlook would be getting a good deal to buy your acres, but remember you can only sell them for what someone is willing to pay. I hope I answerd some of your questions.
Hello Everrett I would be interested in purchasing your minerals if you are still intersted in selling them. If so let me know. My email is jwpetrogroup@hotmail.com or you can reach me by phone at 918-331-6530. My name is J.W. Wilson with J.W. Oil LLC in Bartlesville, OK. Thanks!
How come this forum is full of so many people that look for nothing more than their own interests? I thought it was suppose to be more of an open forum. I have been called or tracked down by too many people on here.
Cara, I think some landmen spend many hours searching for unleased people who are in a spacing about to be drilled. It must look like a great opportunity to a lease agent when someone announces themselves in this forum, that they are unleased, that they have little knowledge about leasing, and they didn't even have to search long hours to find them.
We had an attorney suggest the changes and did get a positive response to our counter-offer both in regards to the per acre bonus amount and modifications to the lease terms. I really think that RW's post was instrumental in steering us in the right direction. I will keep folks abreast of our experiences over the coming timeline.