I'm sure you are stuck for the duration of the producing well. Did you have a pugh clause? That would free up any parcels of land not held by production and can be leased now when your lease expires.
The landsmen hope to get mineral owners to sign the first lease offered, before the mineral owner finds out what is missing in the lease to protect them. A well can last decades, they predict the average Bakken well to produce for 25-30 years. The production numbers typically drop off substantially within the first year, and then continue to decline in following years, but not as fast as first year. The best you can hope for at this point, if its within the same producing parcel, is to get another well or two, in order to get more than $200 a month. I hope you have a pugh clause.
Of those two wells I spoke about August 27, one is already fracked and producing and I have the division order in my hands. As I have noted before, where I went non-consent I seem to get division orders rather fast. I am not looking forward to looking through general statistics to see how the well is doing.
Received the check with payment from production of the well mentioned below. I really like not being leased, the payment comes so fast. I don't return division orders in ND, and I didn't this time either.
Theresa, the sale price is usually alot less that the long term value of the producing acres. The buyer usually assumes that the decline will be more than the usual to be on the safe side and also that the price of oil may fall as much as 30% or more. The buyer may expect more wells to be drilled but since he has no way of guranteeing that they will be drilled, it's a windfall if the are drilled but they are not directly involved in the buy offer on a dollar for dollar basis, probably just a small premium considering the wells already there.
I don't know if your wells have declined to their more stable flatter decline rate, if your wells are only a year old, the buyer probably wouldn't want to offer you 5 years royalty at the current rate because in 5 years your wells might not be producing even half as much oil with a price 30% less per barrel at which point the buyers tidy 5 year investment starts looking like a 15 year slog just to get his money back.
If you are leased, you already probably conveyed away 80% of the value of your mineral acres for the lease bonus, and a royalty on what is sold, and you are probably subject to deductions from your royalty so if you bargained for 20% royalty, your net effective royalty after deductions and taxes is probably closer to 17.5% or less. If you perform another transaction, selling your remaining interest in the mineral acres, your royalty, you are probably just going to lose even more money, anywhere in the rage from 30% to 80% over the long haul and 15% capital gains tax this year for selling.
Theresa, if you must have the money from the sale, do what you have to do. I just wanted you to know what the most likely outcome is.
If you will give the legal description of your acres, I would be glad to take a look at them and tell you what I can deduce from the information I gather. Possibly all your wells are Bakken and you could have Three Forks potential equal to or greater than your Bakken production. I know, I have acres in Dunn county also, one spacing with Bakken and Three forks production and one with just Bakken. If you are in the good part of Dunn county, you could eventually have 12-16 wells per spacing. How many wells do you have now and how many would you be giving up if you sell? The buyer is wanting to buy your acres with a fraction of your own money, if you wait, you should get all of the purchase price and more from the royalty and avoid the 15% capital gains tax. Let me know if you want my analysys of your acres.
I just received another AFE for a new well in 149-93-24 which is my larger spacing I am a carried interest in. It also included an offer to lease for $1,500 per acre and 20%. Best laugh I've had in awhile because in that same spacing I have a well that I was a carried interest in that is about paid off and I am going to become a working interest. What a lovely day!
Hi, I am a 'newbie' to this form and to anything in the Gas/Oil business. Two years ago I inherited about 2000 gross acres and .02198 net mineral acres in Dunn County Township 148N, R96. I have a gas and oil lease with Bakken Oil that will expire in another year. I received a DO from XTO Energy covering parts of Sec 25 and 36 T148NR96W stating that my interest is being suspended pending certain title issues. I do not know if this area and the small net mineral rights are or will be of any value. I am trying to gather info for my self and can pass on to my niece and nephew who have a smaller 'net mineral' rights in the same area. Your thought and comments are appreciated.
Lee, I forgot to mention in my reply to your thread that your lease will not expire, at least not concerning the mineral acres that you have the well on.
Dennis, As always it depends on your location. If you state your Township & Range you may get a useful answer from someone who has leased recently. Presumably if your minerals haven't been drilled yet you are somewhere along the edge of the play. Which direction would make a major difference in what you might expect.
Dennis, I don't have the current bonus rate but I do have some information. Oxy and Oasis both have wells near you. I would rather have Oxy drill my well because I think they would do a better job and get more oil out of the ground.
We have mineral rights in T148N-R94W-SEC15 (S1/2-SE1/4) HC Wounded Face. WPX Energy Williston. Does anyone know what is going on in this area? Our check s have been very erratic for at least a year. I know we will only receive a check if the amount is over $100. However, we would appreciate some insight. Thank you for your thoughts.
Ms. Larson, they probably won't plug any wells until they are considerably running in the red because they may be in the black again when the price of oil recovers. Plugged wells beyond the cost of plugging have no sale value and many can be sold. Once they are plugged they would be costly to re-enter.
If there is a tank on site for oil storage, they could produce a few barrels a day, one day a month and just store it in the tank to keep costs low. Wells not being pumped may recover considerably also so they may have respectable production that one day a month. Oil migration is slow in the rock of the Bakken. I expect a great many of these wells will become "Legacy" producers that may only produce 10 BBL a month but may do so for many decades. This has been an important supply of oil in the US, not a lot from any one well but over thousands of wells it adds up. The low producing wells also qualify for tax breaks which keep them economic to operate longer. I hope this helps.
I have received two new AFE one for T-149 R-93 section 24 and the other for T-148 R-93 section 2. The wells are about 2/3rds the cost and about twice the number of frack stages of my previous wells. I expect very good things from them.
I knew that operators were paying far too much for drilling and completion services during the frenzy. With the cost of wells lower, I expect there will be as much profit for the operators at $70 per barrel as there was at $100 per barrel before.
Life was so simple a year or so ago; then I found out I inherited twenty net mineral acres that is part of a 6000 acre tract in Dunn and McKenzie Counties, ND.
After stumbling and fumbling my way through countless records and sources I've discovered that there are at least two leases in effect on part of the 6000 acres (Marathon Oil and Bakken Oil/XTO) and royalties have been accruing (from Bakken Oil/XTO) on my behalf and are being held by Dunn County acting as trustee (because at the time of the lease the owner, Me, was identified as unlocatable). I'm in the process now of transferring the past royalties from the County acting as trustee to me, the new trustee.
I have been approached by intermediaries of oil companies to see if I would be interested in selling my twenty acres. I have received legitimate offers that, frankly, appear to be pretty tempting.
My question: How do I go about determining a fair value for my twenty acres? I have a statement of the current monthly royalty payments, but from the view of a prospective buyer, they don't appear to justify the generous offers I have received. They must be privy to information and future activity that I am not aware. As a start, I have the Townships, Ranges and Sections that make up the 6000 acre field. As an out of state owner, I can only due internet searches and research. I was able to extract the two lease documents from the NDRIN website. Where can I get information on drilling and wells on the 6000 field.
Thank you for any advice and direction you may offer!