Existing production in Fallon County is along the Cedar Creek Anticline. The anticline runs roughly from the NW to SE across the northern half of Fallon County. The Cedar Creek is an oil play. Prior to the recent Bakken play, the Cedar Creek was the largest oil producing area in Montana. Fallon County also has shallow natural gas production. Much of this is along the SW edge of the Anticline.
Denbury Resources (was Encore) is the primary producer in Fallon County. ConocoPhilips (was Burlington Resources) and Continental Resources are the other two larger players in oil production. Finally, Fidelity Exploration is the primary producer of the shallow natural gas fields in the county.
Looking ahead, Denbury Resources has plans to build a pipeline carrying CO2 from Wyoming into far SE Montana for enhanced recovery there (in Powder River Co). They've indicated after that is established they may extend the pipeline up to Fallon Co. for CO2 injection into the Cedar Creek formation as well. However if this is done, it would likely be four or five years from now before it could be completed. The first leg of the pipeline has not been built yet. Nor is it certain that Denbury has adequate CO2 supplies to provide for the project in both counties.
Recently there has also been some interest in exploring to the north and east of the anticline along the Fallon Co. & Wibaux County line. There has been some leasing on this play. However, I don't believe anyone has attempted to drill there yet (in recent years).
You're welcome. Denbury's latest info now has 2017 pegged as their goal to start CO2 injection in the Cedar Creek field. However, I believe they have yet to begin construction of even the first leg of the necessary pipeline (WY to MT line). So I'd not be surprised if it took at least a couple years longer than this projection.
As far as I've heard it is quiet on any lease offers in the county. So if anyone receives any lease offers it would be interesting to know what terms and which areas are being offered. Good luck to all.
You're welcome. Denbury's latest info now has 2017 pegged as their goal to start CO2 injection in the Cedar Creek field. However, I believe they have yet to begin construction of even the first leg of the necessary pipeline (WY to MT line). So I'd not be surprised if it took at least a couple years longer than this projection.
As far as I've heard it is quiet on any lease offers in the county. So if anyone receives any lease offers it would be interesting to know what terms and which areas are being offered. Good luck to all.
You're welcome. Denbury's latest info now has 2017 pegged as their goal to start CO2 injection in the Cedar Creek field. However, I believe they have yet to begin construction of even the first leg of the necessary pipeline (WY to MT line). So I'd not be surprised if it took at least a couple years longer than this projection.
As far as I've heard it is quiet on any lease offers in the county. So if anyone receives any lease offers it would be interesting to know what terms and which areas are being offered. Good luck to all.
we are in the process of negotiating a lease on 640 Acres in Fallon. heve not leased here since 1999. Can anyone shed any light on the going $per A. or what would be reasonable to expect.?
John, I have not heard of any recent leasing in Fallon County (though I'm not sitting in the courthouse). About a year and a half ago there was some activity on the north side of the county. It may be helpful if you would provide more info, as your proximity to the existing production (or lack thereof) would make a big difference in what constitutes a fair offer.
In particular, where are your minerals located within the county (at least a Township & Range)? Also, if you're comfortable stating it, what are the terms being offered? In general I can tell you if you're hearing a reasonable offer. All in all, I'm glad to hear you're getting some interest.
John, your location places you to the north of the Cedar Creek Anticline and outside the existing production. Though you are in the area where there was leasing activity in the past year or so. If you know anyone else in that immediate neighborhood I'd suggest contacting them to try to learn what others have been offered.
In general I'd say your offer sounds pretty fair. Though I would push for 3/16th (18.75%) royalty instead of the 1/6th (16.66%) offered. Also, don't forget the basics. Since your 640 acres are in separate townships (ie... located in more than one section) be sure to include a solid Pugh Clause in any lease. Avoid any option in the lease to extend their primary term. It's unclear if that area will develop into an oil play and it will probably take a few years to determine if it will. So you don't want to be tied to today's terms (in an option) if that area suddenly looks hot three to five years from now.
Again, if you know any folks out there give them a call. If not it looks alright if you shoot for a higher royalty and keep as short of term as possible (3 years better than 5, and never go for 10 years). Hope this helps, let us know how it works out. Good Luck.
Thanks so much for your input. We don't know anyone in the area to check with. I'm so glad to have found this site and discussion before we committed to anything. We don't want the offer to go away but also want to be sure that we don't agree to anything we shouldn't. The last lease was in 2000 for $50 per Acre. 5 year term, 1/8 royalty. I don't have a copy of the proposal yet, only verbal discussion.
I have received a proposed lease from B.H. Grace Oil, LLC, out of Dickinson, ND for T9N 60 E. Section 14, north half. This is north and some east of Baker, I believe. Can't find anything on this company on Google. Anyone heard of them? It's concerning to me that they want to be able to re-lease the lease. They offered $50 a mineral acre at 15% royalty. Is that good or not?
Thank you
john rudeen said:
Eastern MT said:
You're welcome. Denbury's latest info now has 2017 pegged as their goal to start CO2 injection in the Cedar Creek field. However, I believe they have yet to begin construction of even the first leg of the necessary pipeline (WY to MT line). So I'd not be surprised if it took at least a couple years longer than this projection.
As far as I've heard it is quiet on any lease offers in the county. So if anyone receives any lease offers it would be interesting to know what terms and which areas are being offered. Good luck to all.
David, your minerals are in the same neighborhood as Mr. Rudeen. While his offer sounded OK, yours sounds low on both their $50 bonus and 15% royalty. There is hope NE Fallon County and Wibaux County might have good potential. Though at present that is completely unproven. So expecting $750 is unrealistic, yet $50 is better suited to a county with absolutely no current production.
So first of all don't get greedy. Though, secondly don't tie up your minerals now for just $50 when this may be about to liven up. I've not heard of Grace Oil, LLC (though that is meaningless). They might be leasing on behalf of someone else. However, they are probably just trying to get ahead of a potential play and speculating by blocking up some acres on long term leases.
An "option" to extend is always a bad move for the mineral owner. Tell a Lessee you won't accept any lease with an option. Nine times out of ten they'll agree to drop it. Don't let a promise of a sky high bonus amount on the option exercise (then) entice you. Though if you feel compelled to take a lease with an option, never do more than a 3 yr lease with a 2 year extension. I'm guessing they're offering a 5 year + 5 year instead. Good Luck.
we recieved the same offer from Grace for Fallon County township 9 Range 59 E of MPM section 11. We have been contacted by them previously but have not leased to them. We are in the process of leasing the above section but not complete as yet. We are not leasing to Grace as their offer was received after we had already been contacted by another company at 3 times the rate.
Eastern MT said:
David, your minerals are in the same neighborhood as Mr. Rudeen. While his offer sounded OK, yours sounds low on both their $50 bonus and 15% royalty. There is hope NE Fallon County and Wibaux County might have good potential. Though at present that is completely unproven. So expecting $750 is unrealistic, yet $50 is better suited to a county with absolutely no current production.
So first of all don't get greedy. Though, secondly don't tie up your minerals now for just $50 when this may be about to liven up. I've not heard of Grace Oil, LLC (though that is meaningless). They might be leasing on behalf of someone else. However, they are probably just trying to get ahead of a potential play and speculating by blocking up some acres on long term leases.
An "option" to extend is always a bad move for the mineral owner. Tell a Lessee you won't accept any lease with an option. Nine times out of ten they'll agree to drop it. Don't let a promise of a sky high bonus amount on the option exercise (then) entice you. Though if you feel compelled to take a lease with an option, never do more than a 3 yr lease with a 2 year extension. I'm guessing they're offering a 5 year + 5 year instead. Good Luck.
Thanks for the input. Any info I can get is greatly appreciated because I know absolutely nothing about leasing mineral rights. This is my first
john rudeen said:
we recieved the same offer from Grace for Fallon County township 9 Range 59 E of MPM section 11. We have been contacted by them previously but have not leased to them. We are in the process of leasing the above section but not complete as yet. We are not leasing to Grace as their offer was received after we had already been contacted by another company at 3 times the rate.
Eastern MT said:
David, your minerals are in the same neighborhood as Mr. Rudeen. While his offer sounded OK, yours sounds low on both their $50 bonus and 15% royalty. There is hope NE Fallon County and Wibaux County might have good potential. Though at present that is completely unproven. So expecting $750 is unrealistic, yet $50 is better suited to a county with absolutely no current production.
So first of all don't get greedy. Though, secondly don't tie up your minerals now for just $50 when this may be about to liven up. I've not heard of Grace Oil, LLC (though that is meaningless). They might be leasing on behalf of someone else. However, they are probably just trying to get ahead of a potential play and speculating by blocking up some acres on long term leases.
An "option" to extend is always a bad move for the mineral owner. Tell a Lessee you won't accept any lease with an option. Nine times out of ten they'll agree to drop it. Don't let a promise of a sky high bonus amount on the option exercise (then) entice you. Though if you feel compelled to take a lease with an option, never do more than a 3 yr lease with a 2 year extension. I'm guessing they're offering a 5 year + 5 year instead. Good Luck.
I would be interested for any contact info you can give me on the two companies that have contacted you, especially the one that you are in the process of leasing with. I have property in T9 R59 S24 and would be interested in leasing.
Thanks!
john rudeen said:
we recieved the same offer from Grace for Fallon County township 9 Range 59 E of MPM section 11. We have been contacted by them previously but have not leased to them. We are in the process of leasing the above section but not complete as yet. We are not leasing to Grace as their offer was received after we had already been contacted by another company at 3 times the rate.
BH Grace Oil,LLc Po Box 1385 Dickinson, ND is the most recent. The earlier lease was with Herco PO box 486 Billings Montana. Herco did tell us they were not doing any more leasing in Fallon County but that may just have been to get us to sign a lease. Deal still not complete as we are awaiting payment.
We have recieved another offer from another company to lease another section in Fallon county: section 10 N Range 59 E Section 17. this is a 4 year lease at $50 A and 15% royalty. then there is a side letter agreement that on the one year anniversay the lessee shall pay an additonal $50 per net mineral Acre. If the lessee fails to pay the lease shall be null and void. Then there is anexhibit A for an exclusive option to extend the primary term for an additional 4 years beyond the four year primary term at $100 an acre making this in effect and 8 year lease. Any Advice?
I am new on this Forum so I will need to catch up on what is going on in Fallon County. My mineral interest is near Webster, Montana and since I do not live nearby, I am wondering if you know of any past or present activity in oil or gas in that area. You have mentioned that current activity is along the Cedar Creek anticline. Is this the only general area of drilling, or is there established oil and gas work being done in other areas, particulaly in the South East of the County? Would appreciate whatever you know with respect to my Question.
Douglas, I believe "Webster" is in 4N 59E which is a bit to the east of previous Cedar Creek activity. As far as I know there is no current activity anywhere east of the Cedar Creek Anticline, and in general virtually none in the county outside of development drilling in the existing producing units.
However, to get a feel for where wells have been drilled in the past, and visualize where the anticline runs go to this site; www.BOGC.DNRC.MT.gov This is Montana's Oil & Gas website. Go to their map. Then click on the Zoom In icon for a closer view of Fallon Co (to see where the production is), and then a closer view of your particular interest (your township and even section). Hope this helps.