Egl…You mentioned in a previous post about companies offering 3 yrs. What companies are offering three years? Why didn’t you lease with Shale Exploration? If Shale Exploration drills by August, would that change what you are talking about because to me, that’s pretty good and much better than I’ve heard from any other company. Call me old fashioned, but I just don’t see how any of these other companies are serious about drilling for oil somewhere and they do not have offices in the county where they say they are going to drill. I am going to fly out there and meet these people because everyone I’ve cold called about all this has said they have a real office and real people there in Daniels County that go to work every day and want to drill for oil. To me, that makes a huge difference. Who did you sign with and why? I need help here because I am not from the area. I hate to be so demanding, but tell me what is going on. I want to sign with a drilling company. Please forgive my New Jersey pushiness, I just don’t like to make a deal unless I know what is going on,
If mineral owners of the same parcel of land sign with 2 different landmen for different companies who will get to drill? Half of our group signed with Montana lease holding and half with Shale. By the way the price for the minerals has been going up so you might want to contact both of these companies for new numbers.
Regards,
Tim
Tim, control goes to the company with the larger share of the “drilling unit” (ie… 640 or 1280 acres for a horizontal well), not just your “parcel”. So if your group is split 50-50 on say 320 acres, leases on the other 320 or 960 acres will determine who can drill that section or 1280.
If it is 50-50 control within the drilling unit then one company will file with the state for a drilling permit. The other company can contest that application, in which case the MT Board of O&G will hear each side’s case and then decide which gets to drill.
Have you heard of Summit Exploration? John Ely is part owner of this company and he has a tremendous amount of knowledge in the G&O industry. He has drilled over 100,000 wells in his lifetime. His company has 70 petrolium engineers and they are currently working with other people in Daniels & Sheridan Co. If you Google John Ely & Associates, you can read about him and what he is doing with fracking (its amazing) and some of his other areas of expertise. I was very impressed. I’m confidant you wouldn’t be disapointed if you look into what they have to offer.
From what Ive been told is that companies offering a 3 yr lease are “flippers” because it is so time consuming to get all the paperwork to go through here in MT. its just not worth it to them to do a 3 yr. I encourage any who are still looking to lease, look into a company called Summit Exploration.
In my experience the “flippers” act like car salesman. They will either be high pressure giving you a short amount of time to sign or or will tell you that they are gonna drill in 2 to 6 months. For me, I like to search for new permits. If there are permits being pulled then they are serious about drilling. The catch is this…sign before a test well is drilled and it comes out a winner you left a lot of money on the table. Sign before a test well is drilled and its a bust, your a winner. Either way its a roll of the dice. Personally, I think in 6 months we are gonna see significantly higher and better offers on leasing and royalties.
additionally…I would beware of the long lease terms. Optimally a 3 year lease with a 2 year option. Not seeing tho that anyone is yet willing to give those terms. At a minimum I would like to see a 5 year with no option with a lower up front per acre and higher royalty. Don’t forget the pugh clause in any lease offer you consider.
Thanks, Thats good info. It looks like a 3/5ths or 4/5ths split in the group.
after some of us signed another company upped the offer considerably.
Im not sure about that. I dont fully understand all this. Whole other world…this O&G stuff. Thats just what I was told.
If I were to try to flip some mineral acres I would want the longest lease I could get to increase the chance of my being able to flip them so I wouldn’t lose my capital investment in leasing the acres. It would also allow more time for the value of the acres to appreciate for more profit and or be easier to flip a couple years into the lease.
6 months ago the offer was 150, 5yr , with a 4 year option and 1/8 royalty
now, it is 325 with a 4 or 5 yr option and 1/6 royalty. Things are looking up. Still no drilling permits tho.
Billy Bob Bob Billy,
I’m not sure if you’re describing an actual Daniels County offer of $325 with a 1/6th. If it is, would you please post which company offered those terms and for which Township & Range.
Thanks, Your Long Lost Cousin,
Jim Bob Billy Bo Bob
Its the same story on leasing gas or oil, people get over excited and jump on the first offers. Don’t worry, if you were contacted, the landman will return if you don’t take his first offer. The game is in it’s early stage. The royalty will be the money maker if they do hit oil. The bonus money is nice, but think of the long run. Never sign a five year lease. Lots can change. If they don’t drill in two years on a two year lease, you get to do this all over again and you can renegotiate your lease for maybe more bonus money and higher royalties. Also if you have lots of acreage, it is smart to divide the acreage so they can’t tie up all your minerals by drilling one producing well on (your single lease). Makes them drill more wells to hold land. 1/6th royalty is the low end, never sign for 1/8th royalty, even the good old USofA never signs a lease for less than 1/6th these days.
Shale is making that offer, however I am not sure of all the area’s they are looking at in Daniels Co. They leased some of ours but not all and they didn’t lease the land in Roosevelt Co.
Many people that have spoken to Shale received a mailing in the last several days with the new offer.
It’s northeast of scobey. Don’t have the particulars with me. Cousin you say??? Does that mean I have a stake in yer minerals too??? Just kiddin. God bless and good luck!!
What Dennis said. Don’t jump the gun. There is oil dem dare parts. Its a comin and shale knows it. iPads aside, my feeling is that they know something we don’t and they will sell the leases tho the real players when it moves that way.
Well then shale has 30 million sittin on the crap table with no drilling operation…
I know there is oil there my grandpa had a well in Daniels in the 60’s
That entire area was seismiced in 80’s. The only thing holding this thing back is resources and manpower.
Haha! Nice. Okay I look at it like this. If I was an investor I would throw my money at a test well first (vs throwing millions of dollars at a pie in the sky) if I didn’t know about the feasibility of the area for oil production. just my two cents.