Risk Penalties in Divide County

Shales Bakken Shale
21

sigh, When the hell did I (or anyone else) have to answer to you?

I posted the exact statue that address the charges.

How I came up with 350% is this:

100% the actual cost of a non-consent's well cost.

200% the actual penalty of the costs

That's 300% or 3x, although you could say technically the first 100% isn't an actual "penalty"

The other 50% is the additional charges that is listed as up to 200%. I used 50% as a ballpark type estimate. that's how I got the 3.5x charges as these are additional charges to the costs of the well for the equipment.

One could say the "Penalty" is actually 200% or 2x. as the cost isn't a penalty, and the other charges are also a percentage too.

I'It's obvious you have made yourself knowledgeable in this area. Good for you. But even the best Oil and Gas Attorney's and landmen don't know everything. A bit of humility and niceness can go a long way.


r w kennedy said:

Mr. Dayton, we have established that there is a 200% of owners cost for some things and a 100% owners cost for others, but you have shown nothing that would show that everything has a 200% cost and that some other things have an additional 100% penalty in addition to a 200% cost already assessed. You can't show a 350% penalty as you asserted because there is none.

I realise that landmen do not like to be told they are wrong and may interpret it as an attack, unfortunately, just because you don't like being contradicted, that does not make it an attack.

Mr. Dayton, you say I have disdain for all landmen but that is not true. I have disdain for landmen who do not tell the truth or spread information that is untrue. There are some landmen and oil and gas professionals on my friends list so I am sorry but I have to contradict you again.

You can't show where you could come up with a 350% penalty so you want to distance yourself from it by saying you are not a lawyer. Since you are trying to claim that you are not a lawyer and incapable of determining what the law says, on what basis are you going around telling people that there is a 350% penalty?

I want to thank you for your concern for my welfare in giving advice, I usually tell people what I have found in the law and recommend they read it for themselves, since I actually read the law, I think I will be fine, but thank you anyway.

I believe that the facts have shown that there is no 350% penalty for refusing mineral owners in Montana and that you really do not know what you are talking about in this case. Please stop spreading misinformation and understand that if I contradict you, it's in the interest of making sure that accurate information is out there. It's nothing personal, as you would seem to want to portray it. This is not about me being right and you being wrong, or you admitting you were wrong, although I think you missed an OMG opportunity to show what an honest and standup guy you were and certainly would have earned my respect. As things stand, I hope you have a great day.



Daniel Dayton said:

Bill, In Montana, you have the same 3 choices. However, the "Non-Consent"/Force Pooling is a little different. The Risk Penalty is 3.5X your participation costs. For MT much of the wells haven't produced enough to make going "non-consent" worth the 3.5x penalty, so you really don't want to be forced pooled in Montana (in ND the penalty is only 1.5..which isn't much)

BUT, you are protected that before a company can drill, they have to offer you a lease by law. That lease has to be "Fair Market" which is usually the average of all the other signed leases in your tract, so they can't offer a crazy low ball offer.

I'm not sure what happened by this: "I sign it and the reject it, then a second time they e-mail me the same offer Dec. 20th asking for a reply if I want to lease so I did the next day." If you signed and notarized the lease, then the lease should be enforced. If you just verbally agreed to a lease, but never signed it the oil company can back out of the lease. (but again as above you are still protected from losing any mineral rights if they drill a well...but, oil companies get leases all the time with out a well though.)

Hope that helps.

Daniel

22

Mr. Dayton, you do not have to answer to me, I thought I explained that I will contradict false information wherever I find it and that the fact it was you who spread the false information is completely beside the point.

The law expressly says what carries a 200% cost.

The law expressly says what has 100% cost.

It amuses me that you are reading into the law that these costs are stacked.

From what you have posted section (i) I don't see where anyone with an open mind can take away anything other than everything outside the well connections has a cost of 100% unless it is named in section (ii).

Section (ii) enumerates all the things that carry a 200% cost to the refusing mineral owner, you will notice that the things from section (i) are not included or mentioned among them and that at the end of the section (ii) it says including the well connections. Including the well connections (ii).... and outside the well connections (i) is a clear demarkation, made even more clear by them being in different paragraphs. I don't believe that you need be a lawyer to see this.

The greatest point of all is that you have not shown where it's assumed that all things start at 200% cost and where the law says that the 100% would be in addition to the 200% that you assume, that you have presented no basis for because it does not exist.

I agree that a bit of humility and niceness could go a long way, but you keep saying I'm attacking you when I am only contradicting you on a point on which you are wrong. It's not very humble to assume a personal attack when I am just trying to correct information, it tells me you have a very large personal investment in being right and that leads to neither niceness or humility.

Buddy Cotten has taken me to the woodshed a few times, when he did so I thanked him for setting me straight.

You can't show a 350% penalty because it does not exist. That statement is not an attack. You can try to obscure the issue, you can backtrack and say you are not a lawyer, although it didn't seem to bother you to state that there would be a 350% penalty. It is what it is. If you say it again somewhere else here, I will correct you again, should I see it because I think people need accurate information to make an informed choice and a false 350% penalty could take that option off the table when it's still a viable option. I hope you have a great rest of the week.

23

greetings, I am a investor, and a land man I can probably get you a lot higher bonus, I will need to get the Township range and Section, and how many net acres you own, please email me [email protected]

Thanks

24

Maria, all the replies seem to not apply directly to you, but Mr. Kennedy and Jody Kuntz

are experienced in being a partner in wells by going unleased, and I suggest that you benefit

from their savvy and experience.

Larry

25

Thanks, Larry. My brothers and I decided to go non consent on our Divide County minerals. The confidential period will be over in June so we've got our fingers crossed!

26

Try Ivan Stalick [email protected] 307-752-6864

27

Maria, you would receive the weighted average of whatever anyone else in the spacing leased for or 16%, whichever the operator elects. You may as well say 16% because if the operator has a chioce, he is not going to pay you more than that. It would be extremely difficult if not impossible these days to find a virgin drill spacing in ND where the average royalty was not higher than 16%.

I don't think you can avoid the risk penalty. If nobody would lease for probably $900 per acre and 3/16, then the operator probably wouldn't be drilling your spacing. Maria, you have to remember that most mineral owners sign the first lease they see without even negotiating so the lease offer will be considered reasonable.

If they didn't send you an AFE so you could participate, then you might have a leg to stand on. Even with a perfectly good technicallity like that I would wait until the well paid out and the risk of loss was totally gone because if there was still any risk at all, the NDIC could allow the operator the opportunity to fix their error.

Maria, as a matter of perspective, I do not mind the risk penalty so much. It is 50% of the actual cost of drilling the well, it's a penalty, it's NOT accruing interest or anything like that. In fact, if the money supply keeps inflating at the rate it has been, the money you pay the penalty off with will be worth far less than the money the operator paid to drill your part of the well. The surface equipment is dollar for dollar with no penalty. Your 100% of participation and 50% risk penalty is actually buying you something, you will have ownership in the production plant itself, the well and equipment, tanks, pump gathering line. it will be equipment you own so the operator will not be able to charge you for using it, as he does lessors, you will own the equipment the use of which would make up much of post production costs, treaters, compressors, gathering lines, dehydrators, all things that most people who leased are going to have deducted from their royalty anyway. If I'd have to pay for it in a lease but not own it, I might as well own it so I can take it off MY taxes. Crazy thought I know, if I'm paying for it I want to be able to deduct/depreciate it.

You still have the opportunity to negotiate. I think you can do better than $650 per acres if you have even 5 acres, but the operator really does not want to move much on the royalty, at least so I hear from friends. I basically looked over my friends shoulder while they were dealing with Baytex and the best that came out of even bypassing the landman and dealing with the operator was $900 per acre and 19% royalty, but they did get several clauses removed and their addendum added which I consider a greater victory than a few hundred dollars and 0.25% more royalty.

28

Many thanks to all who responded and provided information. My brothers and I decided that going non consent suited us best. The time of confidentiality is over in June so we're just saying our prayers.

Again, I appreciate every one taking the time to respond and educate me.

Best wishes.


r w kennedy said:

Maria, you would receive the weighted average of whatever anyone else in the spacing leased for or 16%, whichever the operator elects. You may as well say 16% because if the operator has a chioce, he is not going to pay you more than that. It would be extremely difficult if not impossible these days to find a virgin drill spacing in ND where the average royalty was not higher than 16%.

I don't think you can avoid the risk penalty. If nobody would lease for probably $900 per acre and 3/16, then the operator probably wouldn't be drilling your spacing. Maria, you have to remember that most mineral owners sign the first lease they see without even negotiating so the lease offer will be considered reasonable.

If they didn't send you an AFE so you could participate, then you might have a leg to stand on. Even with a perfectly good technicallity like that I would wait until the well paid out and the risk of loss was totally gone because if there was still any risk at all, the NDIC could allow the operator the opportunity to fix their error.

Maria, as a matter of perspective, I do not mind the risk penalty so much. It is 50% of the actual cost of drilling the well, it's a penalty, it's NOT accruing interest or anything like that. In fact, if the money supply keeps inflating at the rate it has been, the money you pay the penalty off with will be worth far less than the money the operator paid to drill your part of the well. The surface equipment is dollar for dollar with no penalty. Your 100% of participation and 50% risk penalty is actually buying you something, you will have ownership in the production plant itself, the well and equipment, tanks, pump gathering line. it will be equipment you own so the operator will not be able to charge you for using it, as he does lessors, you will own the equipment the use of which would make up much of post production costs, treaters, compressors, gathering lines, dehydrators, all things that most people who leased are going to have deducted from their royalty anyway. If I'd have to pay for it in a lease but not own it, I might as well own it so I can take it off MY taxes. Crazy thought I know, if I'm paying for it I want to be able to deduct/depreciate it.

You still have the opportunity to negotiate. I think you can do better than $650 per acres if you have even 5 acres, but the operator really does not want to move much on the royalty, at least so I hear from friends. I basically looked over my friends shoulder while they were dealing with Baytex and the best that came out of even bypassing the landman and dealing with the operator was $900 per acre and 19% royalty, but they did get several clauses removed and their addendum added which I consider a greater victory than a few hundred dollars and 0.25% more royalty.