Cheers. We have negotiated a fair lease in the Bakken and are now down to the clauses in the lease. Does anyone have examples of owner-friendly language? More specifically, 1, Examples of depth clauses for the Bakken, 2, Realistic shut-in clause vs the producer offered $1/NMA/Year, 3. Wellhead production vs In-the pipe.
Our lawyer feels like the lease is Ok, but is happy to help revise the lease. I just need to come up with reasonable asks. Thanks for reading.
Gas well or oil well? One clause in many leases which could be problematic is oil royalties paid " at the wellhead". That should be " royalties paid at the point of sale" in my opinion. “At the wellhead” production is undeterminable in that wellhead production is not ever just oil. That might open the mineral owner to " post production costs". I am not a lawyer and this my opinion. Happened to my son.
The royalties paid with “at the wellhead” language varies by state. Also be careful about “at the point of sale”. “At the point of sale” could be at the well head by an operator selling to their own company at a discounted price. Or it could be another transmission company. Many good leases have language about “at the tailgate of the processing plant” to a third party un-afilliated company with no post production charges. Language varies by state. That is why it is a good idea to get a good oil and gas attorney to review the lease.
You might consider: 1.) Uploading your lease to an AI platform for a plain English analysis. Also have it address your specific questions and concerns. 2.) Search the county records for a recorded lease whose lessor is a company which invests in minerals–one that will likely not accept something like a “Producers 88” lease. In Texas, notice of leases can be recorded with a Memorandum instead of the full lease. A Memo-ed lease will not be of help. Every now and then–in Texas–an mineral owner (apparently) will insist that the full lease is recorded. Leases may not be memo-ed in Montana and/or North Dakota. Back to Texas where leases for State owned lands are not memo-ed and the perfected(?)_lease is available. Are there state owned minerals in the Bakken? 3.) Find a landman who does not work for the company which is trying to lease your minerals and get him/her to look at your lease.
Thank you—some very sharp and insightful answers from all of you. I’ll give it a go. We have been frustrated trying to find a Bakken area lawyer that will take on new clients or whose firm is not engaged with the Lessee.
@Skimo I’m afraid this is somewhat of a common problem in many of the basins around the country.
Historically, it’s been even worse. The shale revolution created attractive economics on a much larger footprint than 20 yrs. ago, let’s say. This opened up the opportunity for some lawyers to begin to have enough business working for mineral owners to make it viable for them. Traditionally, if they were found to be working with mineral owners to any extent, the oil industry would blackball them. In short, the lawyers knew who buttered their bisquits, and it was not citizen mineral owners.
Hi,
What area of ND?
Thanks
I used an excellent firm in the area to probate our ownership. They were very reasonable and pretty quick. If you’d like the info, I will look it up.
How do we run a lease through AI? Please pardon my ignorance. I’m still trying to wrap my head around this AI stuff
Personally, I would only use AI for informational purposes and not for legal purposes. AI only knows what it was trained on and may not know the statutory difference from state to state.
As mentioned by others, AI is a great research tool, and can help you get an idea of what is more fair for a Lessor vs the contract the Lessee will start with. Many of the clauses are really part of the negotiation, and may or may not have implications down the road. Some owners only look at the Bonus, %, and Term. In the end, a Lawyer is advised. But finding an available lawyer that specializes in oil leases in Williston is tough. Possibly look for a firm that specializes in oil/gas but dont limit yourself to ND?
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This is a very abbreviated version of my reply which was for some reason not published. Google “Gemini” and Bing “Copilot” AI models allow one to upload files. If you have a pdf of your lease, upload it and ask your questions. You can also cut and paste lease language or even type by hand. If you have Copilot app on your phone, you can probably just take photos of the proposed lease