Dear forum members!
My cousin, my two sieblings and myself, all residing in Norway, are going to inherit a 160 acres property in Divide County. Oil production started on the property in 2015. This is very new to us, and we don't know much about the oil industry, beeing mineral owners a.o. We need a lot of information so we can educate ourselves. So we have some questions we hope we can get answered.
- There is a signed contract with Diamond Resources Co. giving us 17,5 % in royalties. Is that concidered a good figure?
- What is the tax regime in North Dakota on royalties from oil production?
- Are there any organisations for mineral owners that you can recommend offering information, education and legal advice?
Hello Mr. Sandnes, the royalty is in the middle I would say neither poor nor fantastic for that area.
North Dakota has a combined 11.5% production and severance tax on oil. The state income tax is fairly low in my opinion on the close order of 4% in your situation, considering the area- quality of the wells-current and recent price of oil, your 17.5% royalty and 4 of you sharing in the 160 acres.
I think it reasonable to call it 15.5% for the state of North Dakota.
I don't know if the US has an income tax treaty with Norway.
I hope this helps.
Thank you for your clarifying reply, Mr. Kennedy! Norway has an income tax treaty with the US, so the tax payed in the US will be deducted before we pay Norwegian tax.
Join the forum here and also the National Association of Royalty Owners. Naro-us.org
Thank you, Mr Barnes! We will certainly consider joining NARO.
I have got a sudden interest in oil prices! Can anyone tell me where I can find day to day oil prices for Bakken shale oil?
Mr. Sandnes, the price of oil varies according to the quality of the oil, where the oil is sold, how much negotiating power the company selling the oil has, whether the company entered into a "Hedge" which could either be a higher or lower price than the current market price and transportation costs could be deducted from market price for your oil. Oil from North Dakota has and will bear higher transportation costs because it is not near a hub like Cushing Oklahoma.
The basis which all the factors described above may be applied could be (WTI) West Texas Intermediate, NYMEX or Brent crude price. You can search for these different prices on line. To quickly check WTI and Brent crude prices I go to oilprice.net website but there are many places on the internet where the price of oil can be checked.
Oil from the Bakken is usually high quality light sweet oil and sometimes sells at a premium which hopefully offsets some of the transport costs but not always. The US has had a large surplus in light oils for some time. I hope this helps.