Can someone help me with a question I have? I am looking at a couple lease offers for our minerals in a section not yet drilled in Mountrail Co about 8 miles NE of Tioga. I received this response in one of the negotiations and I don't know enough about the process required in a 1280 spacing unit for a driller to acquire those rights to drill. Does this sound correct that our mineral acres are less desirable for leasing since much of the other acres are held by Hess already? (please read the following I received from a Landman, I x'ed out some details for privacy)
I dug into this acreage. I will try to explain. The remaining acreage in Section X, outside of your acreage, is all held in a unit by Hess. That is not good news for your acreage. That means that Hess already controls most of the section with the acreage they have drilled that is in the unit. So, to get anyone interested in leasing the remaining interest that you own in this section is very low. This is because no other operator can operate or drill it. So to ask for $XXX per acre here may not work for us because we are basically throwing money out the widow. It doesn’t matter if oil is $50 or $100 a barrel. Your acreage is basically isolated within a section that Hess has 75% control over. If we even decide to lease this, it won’t be at $XXX, so let me know if you are willing to come down. You can “hold out” like you say too, but it won’t matter. It doesn’t change the scenario that Hess has put you all in with this acreage. Let me know your thoughts. Thank- XXX
Garren, if you give the legal description it would be much easier to help you. If your ownership is recorded at the courthouse, any "bad guys" can already find you and your interest. What you posted sounds more like a negotiation ploy, but I would like to look at the public records and nearby production and see if in fact Hess has the rights all around you,
From what you said, Hess has evidently not drilled extended long lateral wells...or possibly they have and you are someone they haven't found yet? Which would be an entirely different kettle of fish.
Just off the cuff, I think the landman's message is negotiating ploy. Mention of your saying you could hold out leads me to believe that you know landmen start negotiating at "Hello".
Thank you. Ours and our family's mineral interest are in Township 158 North, Range 94 West Section 20: E/2SE/4, SW/4SE/4 containing 90 gross acres.
I'm not an expert, BUT if in fact they own a majority of minerals they can procede to drill without your lease. That may actually be in your favor since you would be considered non-consent. Rules guide the reimbursement for the minerals. You would be responsible for your percentage (by acreage) of drilling costs, and then after you get what is left. You could be much better off.
Here is what I found. There is a well drilled in section 17 that has two short legs, one that goes into the NW quarter of section 20, the other leg goes into the SE quarter of section 18. Someone might have signed a really horrible lease and this well is holding a lot of acreage. This well has produced 16 barrels of oil from January through March this year. That well doesn't look like it's paying the bills. Of the wells with wellheads in section 20, none of them have produced in 40 years. Interesting that one was granted temporary abandoned status this year even though it has not produced since 1961!
Hess probably could drag out the life of the producing well for a few years just to hold the acreage it holds. This landman or someone thinks something may happen, that there will be more drilling. Slawson made a fair extended long lateral Bakken well from section 16. Hess could probably solve some problems by drilling an XLL well.
I didn't look for the actual lease on the NDRIN because most likely it predates electronic records.
The vertical wells drilled in your section were successful.
I suspect that the terms of the offered lease are as poor as the bonus consideration? If that is the case and I decided to lease I would focus primarily on the terms. If I couldn't get the terms I expected, then the deal wasn't for me. If drilling actually happens, the terms are going to be more important than if the bonus was $50 or $100.
I don't know what to tell you besides someone thinks there is a chance that some drilling will occur or the landman has a crazy client throwing away money. It cuts both ways.
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