Roughly 10 years ago I inherited some mineral rights in McKenzie County, ND. It’s fairly small at 2.5 NMA. My royalty checks each month are $30 - $40. I received an unsolicited offer from what looks like reputable company that makes me think they know something I don’t. This offer is roughly equal to 36 years of royalty payments (at the current rate).
My parents own the other 2.5 acres (originally was 5 acres when my grandparents passed) and they received the same offer.
I know that unsolicited offers are usually low-ball but this one has me thinking. What I’d really like to do is pay for an appraisal to tell me what is really going on but I’m not sure where to start. Thought about contacting the NARO and seeing if they have a list of appraisers they work with.
Is this my best course of action?
There are two wells listed on my statement Olson 34-19SWH and Deborah 14-20SEH.
Looking at the Deborah, it has produced 250 mboe which comes out to about $15MM in royalties or 2000/acre/well. There is room for seven more wells and two lease line wells, but it will probably be a few years before it gets produced. Similar story in section 30 with the Olson. Another way to look at it is sum up all the royalties you’ve been paid over the years and multiple by 8 if history is any indicator. Again, you’ll have to wait years to see that money so discount for PV if you’re shopping it. Also check to see if it is leased, you may have been force pooled in the original wells. Taking a lease will not only get you a bonus payment, but ensure you get a higher decimal on future wells. This should give you a concrete idea; if you’re going to use an engineer to appraise the value, you’d want the cost to offset by helping in the negotiation otherwise it may be a frivolous expense.
Thank you for the suggestions. What is the best way to check if it is leased? My payments come from XTO and they have been less then helpful with this. I asked for a copy of any royalty documents, contracts, etc and they just brushed me off and said I have to get them from the clerk of courts or tax assessor office. They said they are not legally bound to keep them on file. I’d like to see when things expire, etc. I’m not against holding it but I need to figure out exactly what is going on with it too. When I inherited it it was just handed to me and said you’ll get some checks in the mail. Thanks again!
I understand, assuming you live out of state the tax assessor would not be helpful nor would the clerk of courts unless you needed to probate, hmmhhh. The county clerk keeps their records in the MCVV, but it requires a subscription. Do you remember signing a lease or ratification? Looks like most leases in there are 3/16ths so your decimal would be 2.5/1280*.1875 = .000366211 or thereabouts, and they are going to continue to hold the lease with that original well until they can get out there to drill additional wells which they don’t seem obligated to keep you informed on - keep a lazy eye on the ND DMR map to see if permits pop up. Here’s what it looks like.
fwiw, this acreage was sold by XTO to Chord (Whiting/Oasis). Hasn’t closed yet but it was announced. So there is a far greater chance that more wells happen here than there was prior (XTO is not running any rigs and is generally crap and doesn’t really want to be in ND).
In regard to the question of “what is the best way to check if it is leased?” : You are getting royalty checks, it’s leased.
If its $35/mo and you are getting 400x that…$14-15k offers. That doesn’t seem unfair to me. Roughly $4k/NRA. Maybe should be $5k or so but that’s not like its crazy or anything.
@NMoilboy Thank you that is very helpful. I don’t have the paperwork in front of me but the offer was roughly $5250/nma. 2.5 acres = $13k. I mainly wanted to make sure I wasn’t missing some major news and it should be 3 or 4x that offer. I understand they need to make money too so if the offer seems fair I may just take it.
In Williams County I do have 1.1 acres in CLR Long Creek Unit. Since they started to frack the wells 2 years ago my gross income right now is 19,124 with 1/5 royalty. A lot better than my acres with Zavanna. My highest offer just after CLR did the Unit paper work was 16,000.
It’s worth looking into! My sister an I recently inherited mineral rights in McKenzie County as well, different section and different oil companies than yours. My mom always said something wasn’t right, sent a couple letters and made phone calls, and nothing happened. My sister and I looked at it, hired a lawyer that made one phone call and one email, sent no further documentation or title resolution, and then we each got a lump sum amount that had been accumulating and in suspense for almost 10 years. I don’t think it was the right amount, and there are still some more issues with that and other wells that the first lawyer didn’t want to deal with so we’ve hired a more aggressive lawyer now. Don’t ask who the first attorney was because I wouldn’t recommend them, and we just hired the new attorney so no experience yet.
It’s worth your time and investigation. I’m not greedy but if my family worked their asses off farming and providing for their family, their family generations down the line should be able to get what’s owed rather than it being held in suspense. After our success, this same attorney requested for mom’s siblings amounts held to reserve to be released but no luck. They are ticked, saying “do we have to die to get our money.” None of it makes any sense to me.
Good luck! Don’t give up, and if you decide you want to sell, consider asking other family members if they want to buy it for the amount offered to you by the oil company. I’ve told all of my extended family this - to check with me before selling because I would buy them for investment and keep them in the family.
