I own a small percent of several difernt mineral locations tottling over 4000 acers. Shale & Apache have leased all of the minerals but mine. They e-mailed me an offer for a lease along with some of the other mineral owners that im related to. They all got a lease and their signing bouns. Shale & Apache wont do the same with me. Can I find another Oil company that would lease it? How can they refuse to give me the lease, and still drill for my minerals?
Bill, theoretically yes. It breaks down in reality. You have fewer potential lessees if Shale/Apache have the greatest leasehold in your spacings, because other operators can't space and get a permit to drill without their risking a challenge from Shale/Apache which would bring things to a screeching halt. There could be speculators out there who would lease you. It's possible that you will get more for your acres than any of your family if they get some good wells and they offer to lease just before they drill, I realize that doesn't help if you need the money now, but sometimes things work out that way.
r w, Thank you it does help. Info and knolage are allways very helpfull. THANK YOU
r w kennedy said:
Bill, theoretically yes. It breaks down in reality. You have fewer potential lessees if Shale/Apache have the greatest leasehold in your spacings, because other operators can't space and get a permit to drill without their risking a challenge from Shale/Apache which would bring things to a screeching halt. There could be speculators out there who would lease you. It's possible that you will get more for your acres than any of your family if they get some good wells and they offer to lease just before they drill, I realize that doesn't help if you need the money now, but sometimes things work out that way.
*****EDITED***** Mr. Jacobs, this isn't the place to solicit business. Either offer your honest advice or contact the administrators if your sole purpose is advertising. There are advertising options that don't cloud the forums.
Bill,
The operator would have to supply you, as a mineral owner, with an AFE (Authority for Expenditure), before drilling and offer to lease your net mineral acres or give you the option to participate (have a working interest in the well which includes expenses proportionately reduced to your mineral ownership) in the well. However, in North Dakota (the oil play I work in), there is a Risk Penalty Provision:
Under NDCC 38-08-08 working interest owners (“lessees”) can be assessed a 200% penalty out of
proceeds from production of the pooled spacing unit if they choose not to participate in the cost and
risk of drilling and completion. However, mineral owners who choose not to lease are provided a cost
free royalty equal to the weighted average royalty in the spacing unit agreed to by all those who leased
their minerals. The remaining interest of mineral interest owners who choose not to lease is a working
interest in the well and can be assessed a 50% penalty out of proceeds from production of the pooled
spacing unit if they choose not to participate in the cost and risk of drilling and completion. In either
case the paying owner(s) must make an unsuccessful good-faith attempt to lease the minerals or get
the working interest to participate. They must also provide proper notice of intent to impose the risk
penalty and inform the non-participating parties that they can oppose the penalty before the North Dakota Industrial Commission.
I would assume there are similar penalties in other oil and gas producing states. Best to check with the Oil and Gas Commission in your state.
One reason that you were not contacted for leasing is the size of your ownership. When a landman does leasing on a project, you always target the largest mineral owners first to get controlling lease interest in a well spacing unit and then come back later or before drilling and try to get the smaller interest owners.
Bottom line is, you will be contacted before any drilling starts, by the operator of the well or by the company that's doing the leasing for the well.
Hope this helped.
Thank you.
Rhonda Genre said:
Bill,
The operator would have to supply you, as a mineral owner, with an AFE (Authority for Expenditure), before drilling and offer to lease your net mineral acres or give you the option to participate (have a working interest in the well which includes expenses proportionately reduced to your mineral ownership) in the well. However, in North Dakota (the oil play I work in), there is a Risk Penalty Provision:
Under NDCC 38-08-08 working interest owners (“lessees”) can be assessed a 200% penalty out of
proceeds from production of the pooled spacing unit if they choose not to participate in the cost and
risk of drilling and completion. However, mineral owners who choose not to lease are provided a cost
free royalty equal to the weighted average royalty in the spacing unit agreed to by all those who leased
their minerals. The remaining interest of mineral interest owners who choose not to lease is a working
interest in the well and can be assessed a 50% penalty out of proceeds from production of the pooled
spacing unit if they choose not to participate in the cost and risk of drilling and completion. In either
case the paying owner(s) must make an unsuccessful good-faith attempt to lease the minerals or get
the working interest to participate. They must also provide proper notice of intent to impose the risk
penalty and inform the non-participating parties that they can oppose the penalty before the North Dakota Industrial Commission.I would assume there are similar penalties in other oil and gas producing states. Best to check with the Oil and Gas Commission in your state.
One reason that you were not contacted for leasing is the size of your ownership. When a landman does leasing on a project, you always target the largest mineral owners first to get controlling lease interest in a well spacing unit and then come back later or before drilling and try to get the smaller interest owners.
Bottom line is, you will be contacted before any drilling starts, by the operator of the well or by the company that's doing the leasing for the well.
Hope this helped.
Rhonda, the law actually says the operator can recover 200% of the mineral owners cost, When one says there is a 200% penalty, it leads one to assume that the mineral owners cost is recoverd and then a 200% penalty is assessed, which is not the case according to the law. I recently went round and round with a landman who said there was a 350% penalty in Montana, who backtracked to say that the owners cost was 100% of that and then he couldn't explain where the other 250% came from.
I promised Mr. Dayton that I would correct misinformation wherever I found it because he took it personally. I'm keeping that promise.
I would appreciate if you would read the actual law and if you agree, say it as the law says it, recover 200% of the owners cost for drilling the well, staking, surveying [not exact quote] and equipment beyond the well connection is 100% of cost. I don't expect anyone to print both paragraphs from the law but to say that there is a 200% penalty is, I think, misleading. I believe that 200% of cost is a more accurate description. It's nothing personal and I certainly hope you don't think I am picking on you, that I am not nice or lacking in humility. My solitary goal is to make sure that accurate information is out there. I hope you have a wonderful day.
Rhonda Genre said:
Bill,
The operator would have to supply you, as a mineral owner, with an AFE (Authority for Expenditure), before drilling and offer to lease your net mineral acres or give you the option to participate (have a working interest in the well which includes expenses proportionately reduced to your mineral ownership) in the well. However, in North Dakota (the oil play I work in), there is a Risk Penalty Provision:
Under NDCC 38-08-08 working interest owners (“lessees”) can be assessed a 200% penalty out of
proceeds from production of the pooled spacing unit if they choose not to participate in the cost and
risk of drilling and completion. However, mineral owners who choose not to lease are provided a cost
free royalty equal to the weighted average royalty in the spacing unit agreed to by all those who leased
their minerals. The remaining interest of mineral interest owners who choose not to lease is a working
interest in the well and can be assessed a 50% penalty out of proceeds from production of the pooled
spacing unit if they choose not to participate in the cost and risk of drilling and completion. In either
case the paying owner(s) must make an unsuccessful good-faith attempt to lease the minerals or get
the working interest to participate. They must also provide proper notice of intent to impose the risk
penalty and inform the non-participating parties that they can oppose the penalty before the North Dakota Industrial Commission.I would assume there are similar penalties in other oil and gas producing states. Best to check with the Oil and Gas Commission in your state.
One reason that you were not contacted for leasing is the size of your ownership. When a landman does leasing on a project, you always target the largest mineral owners first to get controlling lease interest in a well spacing unit and then come back later or before drilling and try to get the smaller interest owners.
Bottom line is, you will be contacted before any drilling starts, by the operator of the well or by the company that's doing the leasing for the well.
Hope this helped.