Greetings,
Our previous lease expired last October. We received an offer to renew, but did not like the terms ($150/acre bonus, 16.5% royalty). From the Montana WebMapper I see some activity in the area, although much more directly east and west of here.
Has anyone else in this area received decent offers?
Thanks,
Joel
Where is your acreage? The numbers certainly favor greatly being close to proven producing wells. With a wee just west of us and south producing well we got $1500 and 20%.
We have about 200 acres. I believe we would be very happy with the deal you received.
Dctex99 said:
Where is your acreage? The numbers certainly favor greatly being close to proven producing wells. With a wee just west of us and south producing well we got $1500 and 20%.
Joel:
In my opinion, you made the right choice not to renew under the lease terms offered. There is already one Bakken well which was drilled by Statoil Oil and Gas in T29;R55;Sec 10&15, current production in March at 896bopd. Your area is one of many in this Roosevelt area which is still undeveloped but should be in the cross hairs of operators in the future. With this said, I would play the waiting game and watch what activity occurs over the next year or so. $150/acre and 16.5% royalty is extremely low as I would guess a minimum of $1,200/acre; 20% for 3 years would be more in the ballpark. If and when the area becomes more active, your holdings will only grow in value. Again, the key is for you to stay aware of what's occurring and not be hasty to sign.
There is a definite "Red Line" for Statoil; just a section away from one of my wells the people were NOT
made an offer and Oasis offered $400 which they declined. It is going to take some better than average production from the 2nd generation wells to get some of this re- leased! There are just a few hot areas
in eastern Montana and much that just does not do well under current fracking. You may want to research improved fracking methods as presently it is believed that 9-16% of the oil is removed and if that is even increased another 20% it would make more drilling profitable! The roads and other infrastructure needs much improving also before we do the 2nd and 3d wells on pads!!
I agree with Dctex99 in that the operators are still on a learning curve as to how to drill and complete wells in this area. We know that the reserves are in place but the extraction under profitable conditions is still in question. One key component is capital, as it gets very expensive in this game. Companies such as Statoil and Continental has the necessary capital if they are willing to test the areas. Don't be surprised if in the future, much larger spacing units become common which will increase the leasing of areas. Another factor is rig availability as the majority of the rigs remain in ND. Again, the key is not to be hasty to lease and stay abreast about what is occurring in the area.
Joel,
The township is north of the Brockton Froid Fault but a save distance away. There is one Bakken well in 10-15 that dates back to 2011 but is active. Its not a great well at 34 KBO in 31 months but we know the Bakken is there and oil quality is good.
Be patient if you can and deal with operators not speculators.
Thanks everyone for your inputs and valuable information!
Much appreciated.
Thought I would let you know that I did a lease in the same area. 385/ & 18.5 %