We just got an offer from Koda for a small parcel in Township 159 Range 102. They’re offering $150, which I think is low. They say they will be drilling in the NE/4NE/4 of Section 26. Can anyone give any input as to the lease amount or what we could expect from a well.
I cannot comment on the lease bonus amount except to say that you should ask what the royalty is that goes with it and attempt to get a higher royalty (which will have a lower bonus). First offers are usually low in my experience.
KODA filed permits in 2020 for one salt water disposal well and for two horizontal wells, Porter 2635 1BH (Middle Bakken) and Porter 2614-2BH Three Forks B1). One goes south into 35 and one goes north into 14.
Thanks. Royalty is 1/6. I thought that was standard.
That is the state minimum. Several leases in that area were at 3/16ths. Always ask for the highest royalty. You will get less bonus, but the bonus is often minor in comparison to years and years of royalty payments at a higher royalty. I will even go for zero bonus in some areas in order to get a higher royalty.
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Can you give me any insight into participating in a well vs. leasing. We’ve been offered that option. The well will cost 6.8 million. We have a .928% interest.
This is my personal opinion. Others may have their own insight.
Participating in a well is not for the novice who does not understand the business. The operating expenses for a well (and perhaps several more) may be incurred for decades and decades from spud to plugging. The working interest owner needs to realize that they may also need to hire a good oil and gas attorney, accountant, get liability insurance-all of which cost money outside of the drilling of the well. You may have a great well and make a good return or you could have a less than good well and be saddled with joint interest billings for decades. I have heard of families in ND that are desperately trying to get rid of Working Interests that are wearing them down. The older generation individual that got into them may have been a geologist or landman who knew the risks, but the current family members do not know how to keep up with the paperwork and as families pass down rights and fractionate, many more people have a smaller share and may not want the hassle. Suggest that you speak with an experienced oil and gas attorney before choosing to participate. Get the pros and cons from a legal and accounting point of view.
You have 3 options. They just don’t tell you that. You can go non-consent as well. You will get an 18% royalty per month and the remaining goes to pay your share of the well plus a 150% penalty. Most states the penalty is 300% so it is not a bad penalty. I have minerals in the 157 area and I went non-consent on a lot of them. I got insurance in Williston as well. Not hard to do. It will take years to pay off but I dont care. I want more on the backside when I am older. Also if they are offering $150 an acre that is a joke. Another thing if you lease you make no more decisions. Its tied up for life. The other two options each new well they have to come to you with the same 3 options. Also the 6 million is a projected cost. It could easily be a 10 million dollar well if they have issues. So when you do your figures go high. Some companies will let you jump on their insurance policy as well. Small acreage in the Bakken…i participate. Good luck with your decision.
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