Mineral Rights

Ten years? Are you sure are dealing with Shale Exploration and Apache Corporation because I think that was their original offer and not what they are offering now. That is probably one of those little guys trying to get as much time as possible so they can try to flip it to Shale and Apache.

r w kennedy said:

Mr. Volney, it sounds like the standard landman "limited time offer" and is it just me or does it sound to anyone else like a company doesn't intend to drill when all they will only bargain for is a lease that allows them to have the option on your acres for 10 years ? I used to get offers from landmen and they would tell me the offer was only good until friday and I would reply that the answer was no right now because that was not enough time to consider the offer properly.

B Volney said:

I recieved a letter from "them" today,

Bonus + Term:

5yr/5yr

$250-$300/$500 1/6 Royalty

Second Paragraph:

"and will ramp up our leasing efforts over the next few months." [rem: Next Few Months]

Fifth Paragraph:

"In order to be included in the future drilling program, Shale needs to aquire an oil and gas lease from you by july 1st." [rem:Next Few Months]

Ted, you may be right, I HAVE to lease to them to be included!!!

I also recieved a phone call and I asked him if they would consider a three year lease, he said no, I said ten years is too long to be tied up and said goodby.

That is my offering for today....... Brian...

Ted, people like you here and I think they are trying to help you. You are arguing with Mr. R.W. Kennedy for god's sake! He is an icon on this website. He just told you in a post he has 10 producing wells and 2 more being drilled. It doesn't matter if those wells are in Daniels or on Mars he has a lot of experience. He spends a lot of time on this website helping others; he is trying to help you. Please Ted, you have to calm down and take a breath.

When you started this post a whole 3 months ago you state clearly that "you are new to this" and you also clearly state "you don't have a clue". Honestly Ted, this still has to be the case because it has ONLY been 3 months. You cannot have enough knowledge or experience to argue. You can have an opinion, but rather than ramble on about your opinion and push your opinion you need to simply decide what it is that YOU want to do relative to Shale Exploration. You just posted that you haven't even signed yourself - you have to make that decision (but even you have commented your concern that everyone isn't onboard and see it your way). The problem is, you sound like a landman and you should, you have been talking to them and having dinner with them and you have heard their "word". It is just that.....words. I am not saying they will or will not drill, but I AM saying they are not the only choice and as RW stated, you or others do not have to lease today if you don't want too.

Now, I was very tempted to post on this earlier, but bit my fingers (tongue). You went on, in a post, stating about how flippers work - you described precisely how SE had operated and then you state they are not flippers. WHAT!??? I was confused, so I got out my dictionary and looked up flippers and after the definition of a fish appendage it said Shale Exploration. Now is that a bad thing? Maybe, maybe not. But what is bad is that they somehow are trying to lead you to believe they are not. Why are they trying to be sure you are convinced they are not flippers? because they have sensed you are not comfortable with the tag. Are they flippers? Well you said the leased all of this land and then "sold" those holdings to Apache. Hmmm.. they flipped the holdings for tidy profit and likely a piece of the royalty pie. Is that bad, well not for them it worked out nicely. It is bad for Apache, maybe not, they didn't have to do any work and they now allegedly have 300,000 acres off the sweat of Shale Explorations efforts. Why is this an issue - because they (SE) says it isn't so - because they are telling you they are not flippers. We don't like companies that are deceptive.

I don't have minerals in Daniels, I caught onto this thread because it is interesting and posted trying to offer some helpful input. I think people liked to follow your journey. But I would suggest you step back and rather then push your idea you try to learn from people here with a lot more experience. ultimately you have to decide; but the offers aren't such that you have to jump right now - for that matter let them drill one of their wells and see what happens. if they discover oil, your $150/ac offer becomes $1,500 , becomes $3,000, becomes $6,000. You have a very respectable amount of acreage; you should be proud to have acquired it. What is your rush to lease. Keep learning but do it by joining with us and learning with us and trying to make the best decision. I am not saying you are wrong, but I am saying you are following the unproven hype of the moment.

We like you Ted and like your adventures - did you do a movie! Good luck. Keep posting, but most importantly keep learning. ok?

Wilson

Hello from Daniels Co. I have been reading these posts for a long time .. I have followed Ted through his journey I have also watched SE operate for a little over a year up here and I have had dealings with them . First a year ago when the moved in and set up shop and then recently they have been trying to lease our minerals... I am true believer in anyone can or should lease to anyon the feel comfortable with... I remember my mother leaseing bits and pieces over 40 years ago... it ,of course , has never been like this.. it is exciting ... Now to my point of view .. from what I see and have heard from friends and neighbors that SE has picked up a ton of state land leases.. and I believe that the first 4 permits are for stat land drilling.. that means no private land owner gets anything but the state of Mont. does... I have a friend that bought some state land leased for pasture and they are due to drill on it first.. the only thing he is getting is a nicer road to this pasture.. and a little surface damage payment .... no royalties... our county consists of approxamatly 24 percent state land... over the years we see an occasional well drilled mostly on state owned land... cheaper for the driller.. and until recently the state royalty was 12.5 percent... so who knows when a well will be drilled on private land? I am not a beg Se fan my first visit with them ,they couldnt answer questions and were very arrogant.. a first impression is big in our tiny rural community... personnally I dont care for their terms especially the possible 10 year tie up ... and I have spoken to at least three companies that do plan on drilling but they admit it will take a year before they can start... remember the Williston ND area is on fire ,east of us , and it is slowly moving our way I go to Williston once in a while and you can see the progress slowly moving west toward us here in DC... it is very interesting... and yes Apache is active over in the Williston area... I think a little take a step back and relax is ok In fact I talked to a gentleman from SE about a month ago and he told me they were getting their rigs from an asset holding company in Wyoming... huh? supposedly they had already make the deal with Apache... I gues what I am trying to say in there are other girls to dance with than SE... One more thing Ted mentioned he wouldnt sign a lease in a bar .... WELL I guess Ted doesnt totally understand our ways of doing things up here ... there is a lot of busines done in the bars up here ,sorry I guess we arent ans refined as some places , there is land bought or sold ,cattle , hay ,vehicles etc. A lot more deals done than on the golf course... yes I suppose an oil lease here and there.... personnally I have no problem with a flip as long as you are happy with the terms of the lease.. as to recent news of Apache they will probably end up with them anyway .. in fact I talked to a friend this morning and he leased with a different company than SE and he told me that they sold there holdings to Apache.. so I assume that SE isnt exclusive just to Apache... Well enough rambling .. just had to say something because I have been watching this stuff up close almost everyday for about a year..

I mean Shale is not a flipper type company because they had the backing to drill and the plans to drill and substantiated that with evidence PRIOR to Apache. No other company in Daniels County has substantiated any "words" with evidence and evidence is what I have been looking for all along. Again, I go back to building an objective case in my mind as to what company to sign with and I do not see any evidence of another company that can drill for my minerals that is operating in Daniels County. You mentioned the price per acre could go up, but I am not so much interested in that- I want it drilled. Shale and Apache are the closest way to get to that in Daniels County at this time, in my mind. While this is exciting, I am not basing my decision on hype. I am looking at the evidence as to what company is legitimate and has the backing to drill and what company will drill my minerals sooner rather than later. I see the answer to that as signing with Shale so Apache will drill it. However, you said signing with Shale so Apache will drill it is "...not the only choice." What other choices are there, if I want my minerals in Daniels County drilled now?

Ted, what Mr. Kennedy is stating is correct. Wells will be drilled where geology suggests the prospects are best, not just where a 100% leasehold is in place. A company doesn't need 100% of the acres to drill. In fact if nobody else holds more they can drill while holding less than 50% of the acres. Your understanding of a working interest is correct, you are responsible for your percentage of the well (wells) cost. Yet RW is referring to something else, that is going non-consent and "being carried". In that case you (mineral owner) are not putting up any cash to drill. Your proportion of the costs of well expenses are recovered by the driller from your percentage of any oil produced. It is one option, though I'm not sure I'd recommend it in this area. Also, his suggestion to wait on leasing is valid in that the "play" in Daniels County is still in the very early stages.

Though on the other hand, you are also correct on many of the points you're making. All other things being equal, a company is more likely to drill sooner if they hold all, or the vast majority, of the minerals in a drilling unit. Therefore, if Shale has part of your section leased already, leasing with them MAY expedite your minerals being drilled. This is especially so in light of the Apache deal. Though ultimately they (any company) will drill first where the geology indicates they'll have the best potential.

The announced venture with Apache did not surprise me. Back on May 30 I posted that this was the most likely scenario coming. That said, their interest is a huge positive for everyone in Daniels County. Apache is the first major to step into the area. Unlike any of the previous players, they have the expertise and finances to launch a significant exploration program. So Apache's tie in with Shale is also a huge positive for Shale Exploration. This does make leasing with Shale much more attractive. Apache will pick up leases from others, yet at this point a lease with Shale ensures your minerals will become part of Apache's block.

While I previously stated Mr Kennedy's suggestion to wait on leasing is valid, it is equally valid to consider leasing now rather than waiting. I say this because, at this point, it is at best a 50/50 proposition the area will produce. If there are a handful of dry holes drilled, all lease offers will evaporate in a hurry. So it is the classic case for mineral owners in an unproven area; Do I lease now for a sure thing (bonus dollars in hand) or wait in the hopes of better offers in the future? FWIW, I'm in the same boat as Shale Exp is attempting to lease me too. While I'll not sign anything with any extension option (they're still trying for 5 + 5), my inclination is to strike an early deal rather than waiting to see if the future drilling pans out.

Yes Ted it is Shale Exploration with the 5yr/5yr offered to me two days ago, that has always been their offer, the person I spoke with was from Dallas/Ft worth and he is a representitive of Shale Exploration, If I may ask, have you been presented with a different time frame other than 5/5.....? It makes perfect sense now that I read EGL's post about state land/mineral exploration..... a ten year tie up is quite frankly, ridiculous.

Ted Rothstein said:

Ten years? Are you sure are dealing with Shale Exploration and Apache Corporation because I think that was their original offer and not what they are offering now. That is probably one of those little guys trying to get as much time as possible so they can try to flip it to Shale and Apache.

r w kennedy said:

Mr. Volney, it sounds like the standard landman "limited time offer" and is it just me or does it sound to anyone else like a company doesn't intend to drill when all they will only bargain for is a lease that allows them to have the option on your acres for 10 years ? I used to get offers from landmen and they would tell me the offer was only good until friday and I would reply that the answer was no right now because that was not enough time to consider the offer properly.

B Volney said:

I recieved a letter from "them" today,

Bonus + Term:

5yr/5yr

$250-$300/$500 1/6 Royalty

Second Paragraph:

"and will ramp up our leasing efforts over the next few months." [rem: Next Few Months]

Fifth Paragraph:

"In order to be included in the future drilling program, Shale needs to aquire an oil and gas lease from you by july 1st." [rem:Next Few Months]

Ted, you may be right, I HAVE to lease to them to be included!!!

I also recieved a phone call and I asked him if they would consider a three year lease, he said no, I said ten years is too long to be tied up and said goodby.

That is my offering for today....... Brian...

Hello Egl, I totally agree with you about business being transacted in bars, right there in Scoby in the mid 70's I traded my job as a water truck driver with a shot hole company for a job with Bomac Drilling, throwing chain, after they slaughtered one of their rig hands in the pump house........ Them bars will change your life, or end it.... Brian...

Egl said:

Hello from Daniels Co. I have been reading these posts for a long time .. I have followed Ted through his journey I have also watched SE operate for a little over a year up here and I have had dealings with them . First a year ago when the moved in and set up shop and then recently they have been trying to lease our minerals... I am true believer in anyone can or should lease to anyon the feel comfortable with... I remember my mother leaseing bits and pieces over 40 years ago... it ,of course , has never been like this.. it is exciting ... Now to my point of view .. from what I see and have heard from friends and neighbors that SE has picked up a ton of state land leases.. and I believe that the first 4 permits are for stat land drilling.. that means no private land owner gets anything but the state of Mont. does... I have a friend that bought some state land leased for pasture and they are due to drill on it first.. the only thing he is getting is a nicer road to this pasture.. and a little surface damage payment .... no royalties... our county consists of approxamatly 24 percent state land... over the years we see an occasional well drilled mostly on state owned land... cheaper for the driller.. and until recently the state royalty was 12.5 percent... so who knows when a well will be drilled on private land? I am not a beg Se fan my first visit with them ,they couldnt answer questions and were very arrogant.. a first impression is big in our tiny rural community... personnally I dont care for their terms especially the possible 10 year tie up ... and I have spoken to at least three companies that do plan on drilling but they admit it will take a year before they can start... remember the Williston ND area is on fire ,east of us , and it is slowly moving our way I go to Williston once in a while and you can see the progress slowly moving west toward us here in DC... it is very interesting... and yes Apache is active over in the Williston area... I think a little take a step back and relax is ok In fact I talked to a gentleman from SE about a month ago and he told me they were getting their rigs from an asset holding company in Wyoming... huh? supposedly they had already make the deal with Apache... I gues what I am trying to say in there are other girls to dance with than SE... One more thing Ted mentioned he wouldnt sign a lease in a bar .... WELL I guess Ted doesnt totally understand our ways of doing things up here ... there is a lot of busines done in the bars up here ,sorry I guess we arent ans refined as some places , there is land bought or sold ,cattle , hay ,vehicles etc. A lot more deals done than on the golf course... yes I suppose an oil lease here and there.... personnally I have no problem with a flip as long as you are happy with the terms of the lease.. as to recent news of Apache they will probably end up with them anyway .. in fact I talked to a friend this morning and he leased with a different company than SE and he told me that they sold there holdings to Apache.. so I assume that SE isnt exclusive just to Apache... Well enough rambling .. just had to say something because I have been watching this stuff up close almost everyday for about a year..

Like Brian, Shale's current offer to me is for 5 years with 5 year option (as of last week). I will see if we can make a deal but I won't sign with any extension option. Nor would I ever commit to tying up minerals in a ten year lease.

Shale wants a ten year deal because if Daniels County pans out it will take at least that long to drill it (rigs are busy elsewhere). Though just because Shale Exp. "wants" a ten year deal it doesn't mean we need to give it to them. I "want" 50% royalty but I doubt they'll accept that too. At minimum it will be a few years before activity in Daniels Co can get up to scale. None the less, a five year lease term is a maximum you should ever allow.


B Volney said:

Yes Ted it is Shale Exploration with the 5yr/5yr offered to me two days ago, that has always been their offer, the person I spoke with was from Dallas/Ft worth and he is a representitive of Shale Exploration, If I may ask, have you been presented with a different time frame other than 5/5.....? It makes perfect sense now that I read EGL's post about state land/mineral exploration..... a ten year tie up is quite frankly, ridiculous.

Ted Rothstein said:

Ten years? Are you sure are dealing with Shale Exploration and Apache Corporation because I think that was their original offer and not what they are offering now.

thought I would get a quick reply here, the last offer we got from SE was for a 4 and a 4 yr. option... so it is getting better.... that was a couple of weeks ago... and by the way 4 permits have been approved for SE... I do believe that is on state land...

Eastern MT said:

Like Brian, Shale's current offer to me is for 5 years with 5 year option (as of last week). I will see if we can make a deal but I won't sign with any extension option. Nor would I ever commit to tying up minerals in a ten year lease.

Shale wants a ten year deal because if Daniels County pans out it will take at least that long to drill it (rigs are busy elsewhere). Though just because Shale Exp. "wants" a ten year deal it doesn't mean we need to give it to them. I "want" 50% royalty but I doubt they'll accept that too. At minimum it will be a few years before activity in Daniels Co can get up to scale. None the less, a five year lease term is a maximum you should ever allow.


B Volney said:

Yes Ted it is Shale Exploration with the 5yr/5yr offered to me two days ago, that has always been their offer, the person I spoke with was from Dallas/Ft worth and he is a representitive of Shale Exploration, If I may ask, have you been presented with a different time frame other than 5/5.....? It makes perfect sense now that I read EGL's post about state land/mineral exploration..... a ten year tie up is quite frankly, ridiculous.

Ted Rothstein said:

Ten years? Are you sure are dealing with Shale Exploration and Apache Corporation because I think that was their original offer and not what they are offering now.

If they start drilling on 36n R48E on sections 17 and 18, how will that affect us having mineral rights on 19 and 20?

Big Daddy, If they drill horizontal in 17 and 18 and they hit a good one, likely they will be looking for more. sections 17 and 18 run right to left, 19 and 20 run left to right right below 18 and 17. however a well 4 miles north shows no production in dec94 to june 95 and no records beyond that. Nearest well is 7 miles to the south west and another one 24 miles to the south........... good luck

Thanks, I don't have a map that shows all the information you have, where does one get this map?

Big Daddy, use this link

http://bogc.dnrc.mt.gov/web_mapper.asp

near the top in green it says "Go to the montana webmapper" click it and have fun, Brian...