I have 12.85 nma's in Richland County 26N 59E Sec 30 and 19. I have a well proposal which offers lease terms of $1000/nma with 3/16ths 3yr term.
I'm not very knowledgeable about these things and normally would just take the lease. However, the well in question has already been drilled and apparently shows excellent potential.
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Brigham Exploration Company said that the Johnson 30-19 #1H well produced 2,962 barrels of oil equivalent (BOE) during an early 24-hour peak flow back period. This production was composed of 2,684 barrels of oil and 1.67 million cubic feet of natural gas. The Johnson 30-19 #1H well is located in Richland County, Montana.
Brigham Exploration Company said that this well had the highest initial production rate of any well drilled into the Montana Bakken. "
I cannot afford the risks/costs of participation but I'm wondering if I should just wait and let them force pool me. Although from what I can gather the risk aversion penalty in MT can be 200%? Or should I negotiate for better bonus/royalty?
Any input appreciated.
At this point you should get the max in theory…I would for sure ask for 20% Royalty and more money upfront. In Sidney, one person got $2500 plus 20% on a small parcel!!! Good luck!!
Greg:
The bonus amount sounds good to me but I would work on getting the %royalty raised to 20%. This % royalty is more important than the bonus amount in my opinion as this is what you will be paid on over the long haul. Can't help you on the force pool issue as I have avoided these type issues, generally they come with too much baggage.
Brigham came back with that's our best offer. What leverage do I have here, if any?
Greg:
If it were me, I would contact them with the increase in the % royalty and then the ball would be in their park to either accept or decline. Keep in mind, at this point, time is on your side and these are your minerals and it is up to you to negotiate terms which will be of a long term benefit to you. If they are really interested, they will meet your offer. Keep in mind, these landmen or brokerage firms have a ceiling amount they will accept and you never want to take the first offer.
Thank you Charles seems like good sound advice. Is it advisable to counter in writing? Right now I have an email dialogue going on with the landman at Brigham.
Greg:
I have always countered via email as you will have something in writing regarding the negotiations. This is completely up to you in regards to the method of negotiations process. If they are really interested, they will work with you on a settlement. Good luck!!
Greg Quaidy said:
Thank you Charles seems like good sound advice. Is it advisable to counter in writing? Right now I have an email dialogue going on with the landman at Brigham.