With clients in your township, I watch it closely. Here is my prognosis, Samson spent well over $50 million in the area and decided that its money could be invested elsewhere more profitably. Samson sold at well below its cost, in my opinion, and now Bakken Hunter is figuring out how to best adapt the asset it purchased to its business model. That may take some time.
We have known about the oil in the Bakken and Three Forks for 50-60 years but getting it out economically is the current challenge. Samson made a great effort and now it is up to Bakken Hunter to try and improve. The HBP acreage may be held for a long time or until exploitation efficiencies improve. The area will develop eventually but the great demand for leases in the near term has passed. Production records identify the potential for horizontal drilling and fracing in the area and there are much better places to develop in the Bakken in the near term.
Elderly mineral owners without obligations to pass the minerals on are selling to enhance their lifestyle. Others who want to hold on to the minerals must be patient, sign short term leases when the opportunity is presented. Speculators with money to spend are buying to hold for the long term and taking 10 year leases hoping to turn them if somebody gets a good. You may want to wait until the State leases expire in 2014 and peg your demand for bonus to those auctions. Whatever you do, try to avoid leases that can unilaterally tie up your acreage for long periods of time just to get a little bonus.
How do I get a copy of the orders from a Docket Hearing in ND? I am a member of the NDIC website, but haven't figured out the right button to push. I know the case number and the date it was heard, but don't know the next step. It is in Divide County
Looking into selling of 160 net acres in "Williams/Divide" Two producing wells, one on each for over two years. Lease under pugh, and has been since 2010. I have seen prices from $6,000-10,000 for a reasonable price. Any commentary regarding the potential for sales at this price, or any added information would be appreciated. Thank you.
Wayde, unless you have acres that are not in a producing spacing, the pugh clause isn't worth much since the state is designating multiple formations as a common source of supply for the operator's asking.
I saw one lease that mentioned excluding the Birdbear formation depth on down, in the lease. Didn't I see that the IRS says your property is worth 1X the leased value per acre for non producing minerals, and 3X the yearly production per acre for producing minerals? That would be a starting point maybe.
We were offered $1,000 by Continental for drilling in the Sadler field, T161N95W. That's a low ball offer as far as we were concerned.
We did an earnings-based valuation of our rights in the area and found that on a discounted cash flow basis, we would be indifferent to leasing vs. non-consent at $2,500/acre. That assumes the new wells come in at the average of the single producing well in Sec33, Elveida, and 13 additional producing wells in the adjacent Upland field.
We used a real discount rate (net of inflation) of 5%, a USGC LLS posted price of $90/Bbl, and a final production rate of 35BPOD per well.
So based on this, we think a fair negotiated bonus rate would be in the range of $2,500 - $3,000, at 20%
Pugh clause is a clause in the lease that limits the reservoirs that can be retained once production is established. You want them to release everything else back to you. It can be horizontal or vertical. You need both clauses. You have to have it in your lease up front or the oil company can hold everything. Think of a biscuit cutter in a big area of dough. You want to limit the area to the drainage of the well according to the legal spacing. They have to give everything else back to you (except the biscuit) to lease again. That is the horizontal Pugh. Now think of a really thick biscuit cutter. You want to limit how thick that biscuit cutter is. You only want them to hold onto the reservoir they are producing. Most folks put in a 100' depth clause (vertical Pugh) below the deepest production formation. Most of us would like an upper depth clause, but they are hard to get. You want them to have one skinny biscuit retained, not a huge thick one.
Ms. Worthington, you are surrounded but mediocre production around 2 to 3 miles distance. As the price of oil rises and the percentage of recovery of the oil increases as it has been doing, there will probably be more interest in your minerals. Right now there is alot of acreage as good as yours available and the operators are no longer in a feeding frenzy to get it all under lease because it's productive capacity is known. It's going to take some time. Wish I had better to tell you.
Rumor has it that Murex spudded a well last week (Sept. 14) on Sec. 1, T161N, R101W, and will be laying 2 miles of gathering pipe when it reaches depth. Interested in hearing any solid details.
Hello All, My family inherited 80 acres in Divide county, Township 163 North, 96 West of the 5th PM. In 2013 we were offered a lease at 600 bonus per acre for 4 years. Recently we were sent a new lease at 60 bonus per acre for 5 years. Obviously we are not happy with these terms. I'm hoping to get feedback about what others are being offered. I don't see any comments later than 2015. Does anyone have any current information they can share? We understand that with the drop in oil prices the bonus would be less than in 2013 but this offer seems extremely low. Plus the 5 year term is not attractive.
I am surprised I have not seen comments on Samson Resources request for royalty repayment based on the Soo Line right-of-way case . My reaction to them is they have asked for everything. Their request for repayment included royalties paid to previous owner, royalties that had not been paid, and some small errors. I especially liked their inclusion of a "lump sum" for everything prior to their accounting system change.
I actually was able to determine what made up most of the lump sum and that is where I found the royalties of the previous owner.
The detail they provided in the large bundle of paper was surprisingly accurate.
I OCR'ed the detail and tied it to their totals. Going month by month I found that they were pretty close to my calculations based on royalty rates applied to their sales.(if you do this I suggest you do only the 1xx items [oil], the others items [gas, liquids] don't amount to much)
The inclusion of items paid to the previous owner and royalties that had not been paid are what promoted us to consult an attorney. No resolution yet.
NB: Unless you can do the spreadsheet work yourself the savings will not justify the cost. I spent most a week working these figures.
Samson Resources has decided not to pursue collection of the claimed overpayment. Not sure what changed their minds but questioning their figure brought an end to it.
I own some working interest in Mountrail, Divide and McKenzie counties, interested in taking offers. Please send me a private message if you are interested in getting details.