If they don't want to lease then they will be force pooled or will have the option to participate in the well. Usually there will be multiple companies seeking leases in a given area, but for the most part it really depends on the specific area.
Being force pooled is not as bad as industry people make it sound, at least in ND anyway. I'm quite pleased with it myself.
I'd like to understand more about how the whole system works. If multiple companies hold leases on a single pool then I would think the production company is responsible for allocating revenues to the different lessees, right? So if you are force pooled does that mean the company allocates your share directly to you without going through one of these other entities? Does that make any difference in your royalties? (My husband worked in the leasing business in the early 80's up until it fizzled in 1985, his dad was a landman but already retired when I met my husband. Both are passed away so their knowledge is lost to me.)
I'm looking up stuff and now have a section of the ND Century Code to read
Is the minimum pool 320 acres or 640 acres in ND?
Ok, so what about risk penalty?
I'm reading the NDCC century code section, which is surprisingly comprehensible
Sheri, what do you not understand about the risk penalty? The penalty is 50% of the actual cost of drilling and completing the well, you do not owe this out of pocket, it comes only from production. In case your question is about what it entails, from site prep to drilling the well and well stimulation/fracking and some surface piping and production tanks.
The pool is whatever they say it is, down to 10 acres for a vertical well. In practice for horizontal wells, I have seen SM Energy drill on 1/4 section or 160 acres, successful wells too.
The Century code is easily comprehensible. My personal favorite is 38-08-08
Sherri, the operator pays each entity and each mineral owner as usual unless some arrangement whereby the purchaser of the oil pays each entity or mineral owner themselves.
I don't have it in front of me, but I think the statute says risk penalty can be up to 200% of the owner's share of drilling costs. And that's what I'm wondering, if a person doesn't accept a lease offer, or agree to renew an existing lease when it expires, how much difference it makes in return. Thanks for the info about size of pool. How do they decide, especially in fracking, how big the pool is? How do they know how big a surface area covers what they are extracting?
Sherri, if you go back and read the statute again, after I tell you what you will find, I'm sure it will become clear. Firstly, the risk penalty to the owner is 50%.
If you own the right to produce the minerals from having leased them from someone else and you fail to participate or come to some other arrangement with the operator, you face up to 200% penalty.
For the actual OWNER of the minerals the risk penalty is no more than 50% by law.
I got seriously tired of landmen telling me the lie that the penalty would be 200%. Some landmen even embellished it to 300% or more. I laughed into the phone, which may not have won me any friends but they were telling me bald faced lies, easily checked on and that is totally disrespectful. Also a bad business plan, because if I catch you lying at the start, I would not expect, and don't see how anyone else in their right mind would expect someone to become honest later on.
My family is looking at not renewing our leasing contract next year and would like to send out letters of inquiry to a few reparable companies, i.e., Empire and so forth. Any suggestions?
Thanks,
Bob
We have mineral rights near Taylor in stark county do any of you know of interest in that area?
Received a phone call from an Oil and Gas Company looking to purchase mineral rights. Minerals are in Stark County. There are wells producing and have been for many years, as well as new permits/wells in the process. They want the locations (sections/acres) so they can propose an offer sheet, should I even entertain? For the right price I will sell, however it has to be substantially more than I have received in the future. Prior to the bust, offers were coming in around 20-25K
Whiting appears to be drilling several wells in section 28. I'm getting infil wells of my own drilled by Whiting. If Whiting is ready to drill out your sections and get them into full production? I would be reluctant to sell.
I would say that if they had a real offer, they would have already done their research. When the, I hesitate to even call them potential buyers, inquire as to what you own, I think they are just fishing. Likely they will tell you they need your check stubs for the last 6 months so they can make you an offer. I received one such offer not too long ago and I told them no, thanks! If I sold I would be selling all the oil in the ground not just my present revenue stream. I actually just chuckled thinking about it.
Does anyone have any information regarding section 2 in Stark County? Through another mineral lease search, it appears we may own mineral rights in this area. I'm not even sure where to begin if we are interested in leasing or selling, or if there is any drilling activity in the are? thank you.
Paul, If you can provide a complete Township, range, section description, I will see what I can see. Stark county has some really interesting geology.
Township 138 north, range 98 west, section 2
Paul, you appear to be between at least fair production and dry holes. I am going to be conservative and call the production 2 miles north of you fair because it was drilled with 4-5 year old technology, or possibly older.
The dry holes south of you were drilled by Chesapeake who to the best my knowledge did a really poor job of drilling in ND and plugged any well that wasn't a hands down winner.
I don't believe you would be at the top of anyone's list at the moment. I think there is a fair chance that someone will get Bakken production from those acres in the future. As the wells improve year on year, the production could be better than that which is North or northeast of you presently.
I don't think you could sell the acres easily or for near what they may be worth one day because there are so many acres to drill that have similar production to that near you and your area doesn't have a great deal of infrastructure which other areas already have.