Hi R.W.,
Thank you for the info,
They are offering $50 per acre bonus, 5 year lease, and a royalty of 3/16 with a 2-year option to renew at the same $50.
I am inclined to turn it down for 3 reasons:
Your info below
I don’t need the money bad enough to take a low ball offer
It doesn’t amount to much $ anyway even if I did
Do you know anything about this State auctioned land coming up on Aug 6?
Brian, ND State Auctions are quarterly. The list of available parcels up for auction can be found at land.nd.gov. The $1 bid is unlikely to happen, but many times the parcels are bid up quite high. I agree with RWK the guy giving you the info is filling you full of stuff that might need more than a 25 block of salt.
This link should take you direct to see the auction list. http://land.nd.gov/Docs/Minerals/201308Worksheet.xls
results of the auction will be posted by august 7th.
Hi,
Yes, agreed. I will call Wassabee Energy (they contacted me months ago) and a few others for competing offers if any are interested.
Hello, I am trying to negotiate a lease deal. The landman is stating the facts below and I don’t know if there is any truth behind it. I mentioned to him that I thought demand in the area is growing. Landman: The demand is only becoming higher because the “good” areas are all but leased up and people are looking at more speculative land. Your acreage is surrounded by lots of State Land that is going up for Auction for $1/acre on August 6. Its surrounded by water disposal wells… They are going to focus on more infield drilling with ECO pad before they start drilling your area heavily. And he says they wouldn’t entertain a 3 year lease since drilling wouldn’t start for another 5 - 7 years. Can anyone comment to the accuracy of these statements? We are in Range 140N x 105W. Thank you for any insight.
141 140 just north of the I 94 is to be drilled late fall the rates were
$850-1200 per acre bonus 18-20 % royalty. Their is important legal language in each lease that an attorney should review plus they can negotiate the best terms. Make sure you know all your rights before you agree to sign them off without a professional opinion.
My mother signed an Oil/Gas Lease in September 2008. She passed away in 2009 and I inherited some of her mineral shares. I have a copy of the lease she signed for a term of 5 years. She was signed by Empire Oil for Petro-Hunt. I have not been contacted by anyone regarding this soon to expire lease. It is in Township 141N, Range 105W, parts of Sections 19 &30. I read some place that people were (or did) get offers to resign their leases but I’ve heard nothing. Are my mineral rights in an area that might see some drilling? I hope this makes sense, I’ve been following the thread and am beginning to think I should have my attorney look in to this. Any suggestions? I do have a good Gas/Oil Attorney who is in ND and negotiated a lease for me in Wibaux County, Montana.
Brian, I would say that the state doesn’t really care what they lease the land for in bonus amount.
The state gets a decent royalty if they lease for 1/6 because the state pays no taxes to themselves, plus they are going to tax the production and severance of every barrel of oil the operator gets.
When the state does get a high bonus for leasing it’s a sign of competition among bidders and not necessarily tied to the value of the acres. The bids from the year 2000 probably were pretty pathetic in the prime bakken areas.
Your area could blossom 5 or even possibly 10 years from now even though it looks plain right now.
Conversationally, when I hear about the state leasing the acres held in trust for the people for $1 per acre, it makes me want to puke. We are competing against ourselves, against the lowball leases of the acres held in trust by the state. So some landman can say that acres are leasing for $1 in that area, because the state is NOT being a good steward.
It took more than 6 years of Bakken successes before the state finally thought, “Hey, we got a 99% success rate and only the very least informed mineral rights owner lease for less that 3/16 anymore, maybe we should do something about our standard 1/6 royalty”. Of course, it was long after the horses had bolted. It’s like the state couldn’t figure out that it was valuable even with auction prices of $5,000, $10,000 and at least once almost $20,000 per acre. Are such people really smart enough to be looking after our interests? Are they really looking after our interests at all? Mineral acres should not lease for $1, if it’s not worth more than that, it should not be leased at all. The state probably loses money on the paperwork for leasing at $1 per acre.
Brian and Martha, I believe both of you should be able to lease your minerals. The lease sale mentioned has about 5,000 net acres in Golden Valley County (far more than usual). Follow Snues’ link to see the specific townships & sections being offered for lease. Though to jump ahead, Martha you’ll find some in 141-105 not too far away from your minerals. Brian while there is none in 140-105, they are leasing some in sections 32 & 34 of 141-105 which is right above yours.
North Dakota leases are for five years, with a 3/16th royalty in Golden Valley Co. and other oil producing counties. For comparison, last time around (208) the tracts in 141-105 leased for; $112, $115, $120, and $140/acre. All these tracts were nominated for the August sale by either Whiting or Empire Oil (which leases for Whiting). So if nobody else bids Whiting will pick them up cheap. Though, if there is any competition, I’d suspect the August prices will exceed the 2008 prices.
Both of you should check the State’s site again on August 7th to learn what was paid on tracts near yours. It isn’t necessarily what you can expect to receive, yet it is the only ‘public’ info available on actual per acre lease prices. At the least it will give you a starting point.
Brian the landman stated facts yet sprinkled in some BS. $1 per acres is the State’s minimum bid amount. It is also likely it will take some time before drilling expands into your township (if at all). So it’s unlikely you’ll find a three year lease (though Martha might). If they want to lease your minerals offer four years (with five year at maximum). Or you can sit and wait to see how things develop.
Yet it’s unclear what Whiting is looking at (and has found). They have had hit & miss results. There is oil there but not uniformly distributed. So waiting may provide much higher bonuses if they hit wells near your minerals, or none at all if they hit nearby dry holes. Since you’re both on the edge I’d be inclined to try for a 3 or 4 year lease now assuming it’s likely to expire before being drilled. Though that is a gamble, so make sure you’re willing to live with the lease terms if it was drilled. Good Luck, if nothing else it never hurts to shop them around.
Anyone familiar with Aurora Energy Solutions?
All,
I really appreciate all the help and information. You are very kind to respond so quickly and help with the research and educating the newbies (like me!). I thank all of you.
I have received a revised offer of $200 bonus per acre and 19% royalty for a 5 year lease.
This seems very reasonable to me at this point.
Any comments?
Thank you all again
Brian
Brian, don’t know that group. Presumably they are speculator / investors not an operating oil company. I’d suggest you shop your minerals around before signing with them. Read some of the other recent posts above for some names and contact info. Though to comment on their offer; In general for this Big Island play, and your area in particular;
The bonus may be a little low, yet is about where the market is.
A 19% royalty is better than most recent leases.
Five years is on the long end. Try for a shorter term. Yet an investor can’t control drilling so they always want the longest lease possible.
Do your best negotiating, though in the end I’d suggest you do get it leased as results are sporadic enough that this play may cool off soon. Good luck.
Brian, as has been said before elsewhere, if you have a large amount of acreage it can be in your best interest to have your acres leased balancing the risk of having leased too low against the risk of receiving nothing. I spoke with a man who had 3 sections in Hettinger and he took a relatively low bonus early but the operator did not drill. He had a vested interest in being leased, did so and profited significantly. If he had 10-20 acres it probably would not have paid enough to matter at $50 per acre. The operator would never have drilled without this man. you can’t force pool the whole or half of the spacing and still profit greatly as the operator in ND.
Smaller amounts of acres the risk is smaller because the operator can just force pool you and go ahead if they are so inclined.
Always make sure the royalty is agreeable because you just may get a well, good or poor and you will be stuck with that for a very long time. ND is I think going into the production phase but I believe that will make it easier to free up a rig to hold by production rather than harder. Remember, leasing is not enough, for the company. The lessee has to get some production to hold it or they will lose 80%+ of whatever IS there. If seismic says you are a good prospect, I think they will drill.
Mr. Kennedy is correct. Your specific circumstances may dictate the best course for you to follow. Sometimes accepting a relatively low bonus is the better course. Though never accept a bad lease just to have a lease. However, if folks are inclined to lease I’d encourage them to get on with it. The last two wells drilled were dry holes. Going from west to east on the wells drilled so far; They’ve hit modest wells, dry holes, modest wells, dry holes, and good wells. So while there is oil there, it is not uniform across the area. The last dry holes were adjacent to the best wells. As a result, if they hit another dry hole or two I can see the drilling program coming to a halt. In my humble opinion (and just one opinion) now is the time to negotiate the best lease possible. If you do get drilled it is terrific, if not at least get that bonus check in the bank.
Thank you for your response. I did get a card from Empire the other day that said they were trying to contact me so I forwarded the information to my attorney. It’s probably them wanting to renew the lease my mom originally signed. Again, thank you so much for your valuable advice.
One recent lease in GV area was for three years at $895.00 per acre / royalty was 19.9%. That was north of the I 94 and Beach ND .
Be happy to give your the address , phone # and website:
Empire OIl
510 2nd St W, Williston, ND 58801
(701) 774-2845
empireoil.net
area was 141/104 recent high potential wells Bleis, Katherine, Riechoff, Mauss. Check the ND oil and Gas map on ND mineral map.
I also know that they had some other company also interested in that area. It’s best for find other brokers like Empire that are interested in that area. All the broker does is release them to Whitening Oil.
Martha, glad they made contact. Yes expect an offer to extend. Likely they’ll offer similar terms to those from 2008 (probably in neighborhood of $100/acre or so and 15%). Several people have renewed with little or no increase to the royalty offered in 2008. Don’t do that. With a bit of negotiating you should get a significant increase over the 2008 terms for bonus and royalty. Your lands are little South and West of where drilling has been done. It’s hard to say how high they’ll go. I’d guess at minimum try for $350, 18.75% royalty, and three year term. So begin by asking for more than this ($500 & 20%) and negotiate from there. Though if you have an attorney in the area they may have a better idea on current terms.
Also if your Mom’s interest is split between you and siblings, try to negotiate as a block if possible. They’ll be more inclined to give some if they’re locking in several leases at once rather than negotiating each separately. Good Luck.
Thank you!!