Dennis, there are some fair wells near you, not great but I think they are profitable. Hess also has a well completed March 2013 just south and west of you. I think no matter which operator drilled it you would get a cheap well, one that would leave technically recoverable oil in the ground. Just enough well to hold the acreage in the spacing and pay for it, it may be a decade or more before they come back to drill another. I think you are going to be partly on the shelf no matter what you do. I believe the well they would drill for you, cheap, would not be really attractive to be non-consent in but leasing would not be attractive either. If you leased I doubt the bonus and royalty from a cheap well would be really attractive when considering future prospects because when you lease and they drill, your only option is to keep or sell out.
I don't have 80 acres all in one spacing. I think it's easier for me with 15 acres here and there to ask myself, is this what we held onto these minerals for 102 years for? I have also always been a fan of keeping my options open as far as I can. In your situation, I can see where the operator plans to benefit greatly in the future and would like to have dominion over the production of your oil from now on. They want to get in on the ground floor cheap. I would not want to cooperate with that plan because it doesn't look enough like it were in my best interest, or in your particular case, your heirs because it's going to be a long time before they want to do anything but hold. If they came to me with a lease offer and I actually needed that money, not just wanted but needed, I would be asking about what kind of well they were intending to drill. We know it's going to be an XXL long lateral Bakken, but I would want to make sure my earnings from it would be reasonable, why else would I lease? The bonus bribe of about 1% of my oils value? Did we just hold those minerals for 100 years for 1% and a royalty from a well that by design was never intended to be the best it could be and leave recoverable oil in the ground? Is that really in you and your heirs best interests?
If they are not going to make their best attemp to get the most production, I wouldn't want to lease and help them with their plan to hold with minimal production against my best interests and the interests of my heirs. I would not lease. If I were to put myself in the shoes of someone inclined or who really needs to lease, I would start negotiations on how many frack stages my well is going to have, how much ceramic propant is going to be used because the royalty from production is where the greater part of my pay is going to be and I need some assurance that I will receive a reasonable amount from the well. If they put in writing that it would be at least 30 frack stages and use no less than 50% ceramic propant, not the dreaded sand frack where the weak sand gets crushed and does as much to clog the fractures as it does to prop them open. If they are just going to sand frack, I'd just as soon not participate in their shoestring program and take my 16% statutory and hang onto my options for the future. Of course, no operator is going to like that.
When you think about it, the well getting drilled is the largest consideration you receive when leasing. The bonus is a bribe so they can delay on having to deliver the most important consideration, the well itself. When they drill a poor well, you have been shall we say. "spiralled" out of much of the most important consideration you would receive from leasing. In that case I would just want to take my non-consent 16% statutory royalty, it's not like you will get so much more from leasing with a poor well and maybe a decade or two down the line you, or your heirs may be able to make something out of it,but not if you lease and they get production.
The oil has been there a long time and sometimes it's a matter of not yet time.
Personally I have 5 wells that I did not want drilled from 2007 to 2009 with 10 frack stages with sand frack. There have been no more wells in those spacings, 1 well per spacing, since although the wells have paid for themselves and drilling is occouring all around those spacings, wells that produce twice as much oil in 2 years as my wells have produced in 5. I know whereof I speak on the evils of sand frack and being on the shelf with minimal production with no end in sight. A bonus and a couple percent more royalty would not really make things look alot brighter, but being the eternal optimist that I am, my heirs may be able to benefit greatly if given the option. I say if given the option, because a land company committed fraud and tried to go around my brother and I because we would not lease and set up an unlocatable mineral owner trust. It is so valuable that they couldn't let us keep 31 net mineral acres. I sent off the signed work agreement to the lawyer this morning. You have leases on record so you should not need to worry about it, but trust nobody in oil and gas who stands to make a profit off of you.