What I consider to be the big one is if there is oil there. If there are poor wells or dry deep ones around you, I'd take the lease money and run. But if you get a poor well in ND it wouldn't really hurt to be carried, you will still get the 16% royalty until the well is paid for and the penalty retired, which may be never. If you get a poor well and it takes 10 years to pay out and retire the penalty you would need insurance as people have said, If you kept it beyond that point. If the well isn't paying enough to cover your expenses, you could sell your interest in it yet retain your mineral rights, as things may change in the future. I have heard people say that leasing protects you in case there is a poor or dry well. Unless the bonus is extravagant, a lease won't protect you against a dry well. I think most lease bonuses are less than 3% and most less than 1% of what the oil co expects to realize from your minerals. A big deciding factor is, do you need the money right now so bad that you will give up 80 to 84% of your future earnings for 1% right now? Carried in ND (other states are a different ballgame) you are risking 4% or less of your lease royalty, along with the bonus, against a potential to get 400% more (after expenses) for your oil. The difference between 16% cost free you will receive as carried and 20% for leasing (alot of people don't get 20% even), I think is unlikely to make a life changing difference if your holdings are small enough that they will force pool and carry you. In the end, if the situation doesn't look good to you for being carried, it's still a bargaining chip, because you know that whatever happens you will get paid 75% or more of what everyone else got for their oil. In ND you can negotiate to the bitter end. They can't cut you out. Good luck, whatever you do.
Andrew Babcock said:
what factors do you consider when deciding to go force pool or to lease?