William:
Both rw and Daniel have excellent points but I would still contact Hess in regards to your unleased minerals just for the record. I would then aggressively market these minerals to others.
I hold 75% of the Mineral Rights to 158N 97W Sec17 W2. My lease expired on 1/5/12, and I have been actively seeking a new lease, but have not yet signed. I have just discovered that Hess has a cofidential well on 158N 97W Sec 17 SWNE. (GO-Bergstrom D-158-97-17 permit 90187) What is my next step? How can I find out the progress of this well?
Many thanks for your insite. I will continue to work with my Houston consultant and market my holdings to Hess and all other interested parties.
William:
Looks like Hess has a permit to drill the well but it doesn’t appear the rig is on location drilling. You can contact Hess and inform them about the status of your lease. If you can’t reach an agreement on the letoase terms, you can stay unleased and participate in the well. Be sure to fully understand the implications in regards to paticipating in wells. I would choose to get a fantastic lease as you are in a great negotiating spot.
Mr. Hasskamp, as I believe Mr. Dayton was alluding to, it would probably be in your best interest [ it usually is ] to market your lease as far and wide as you can.
Question: My mother signed a lease with someone (I don’t know who) a few years ago. She and her sister only get 8% royalty which seems low but Kodiak drilling unit 328 has drilled 2 wells on their property at NWNE15-155N-99W. They just moved the rig off location so I assume production will begin shortly and NOONE has contacted her at this point. Does that seem normal?? I should think that someone from the oil company would get hold of her to tell her when she would receive a check and/or how she’ll be informed about production, etc. I find it odd that she heard nothing.
Daren, it is my understanding that the next contact they will probably have is the Division order. That could easily be 8 months from now.
I own the partial mineral rights to 157N, 98W sec 9 ( in Williams county). A well has been drilled on the property CASS 9-IH. I assume a horizontal was drilled which would have taken in sec 9 as well as the full length of the adjacent property, which is 2 miles. My question is , If the well is on our property , do the owners of the adjacent property reap the same benefits if oil is found and if so how do the oil companies devide the royalties? In this case it is Cont. Res.
Robert, I do not know if you have this but it has a wealth if information…
https://www.dmr.nd.gov/oilgas/
click on the GIS MAP SERVER to view use PAN, Zoom In, Ect
Mr. Jones, section 9 is spaced with section 4 according to the GIS map. All in the spacing share in proportion to the amount of acres they contribute to the spacing, which appears to be 1280. It doesn’t matter where the acres are in the spacing, they all earn the same amount per acre.
Good morning
My grandparents homesteaded 320 acres @ 157N, 98W sect 9 in Williams county. They passed on and left the mineral rights to their offspring which now number 17, My portion of that is 18 mineral acres. We all signed a lease agreement with Continental Resources two years ago. The lease was for 3 years and for 20% royalty. Continental have since drilled the well and placed it on the Confidential list until October of this year. The well name was Cass1-9H in the Oliver Field.
My question is we are only 320 acres split 17 ways, you referred in one of your previous emails to 1280 spacing, How does that come about? all of that property has to be leased as well and that will involve more people. It sounds to me like a whole lot more mineral rights holders involved. Which seems to me to dilute everyones share immensly.
From my point of view because there are so many people involved; that even if oil were found it would translate to very little return for anyone except the oil company split so many ways. I guess I dont fully understand the way horizontal drilling works and who or how many benifit from it. In a previous email it was explained that the average IPs of the wells already drilled and producing in the Oliver is somewhere around 700 bopd, (not sure). Maybe Iam missing something. At the moment I cant see anyone making much out of this. Can someone please help me in understanding this a bit more. Thank you all for you time in helping an old guy to understand this whole thing
Regards
Bob
Mr. Jones 700 bbl IP is the lower of the two wells near you. The well with a head in section 5 has done 21k bbl in 2.5 months and the one with the head in section 11 has done 80k bbl in 8 months with 3 months only being half months producing. The beauty is that the oil is valuable. The bad part is that 18 acres leased at 20% means you are getting paid roughtly what 3.6 acres produced less taxes 11.5% production and severance, about 4% ND state income tax, any federal income tax your 15% depletion allowance doesn’t cover and any deductions that your lease may allow the operator to make. Still, the oil is valuable and if you have a well capable of producing 10k bbl a month that would be 7.8 bbl per acre per month, 28 bbl per month for you and you may get more than $70 field price per bbl which would be about $1968 a month before all the deductions come in. I would say you will get to keep $1000 to $1400 a month depending on how things fall and the price of oil. Of course the well will decline in production. Sorry for the run on sentence, like awful tasting medicine it’s best taken all at once. You have to have alot of acres to make alot leasing. I got a chuckle one time from someone making a beverly hillbillies reference and saying why wouldn’t you want to lease, the thing is Jed Clampett was an owner and not a lessor. Jed didn’t need a company to drill for his oil, it sprang from the ground, the fictional Jed just needed to have someone collect it and sell it. People just don’t make the money they dream about when you give away 80% before it’s ever taxed. You will make some money from it and you did alot better than many with a 20% royalty, many settled for 1/6 [ 16.67 ] royalty. I hope you get a good well and enjoy the royalty, hopefully another well drilled in your spacing in the future. On the whole we mineral owners don’t understand what we are doing when we lease. Many people who hire attorneys are told they can sign a lease, that there is nothing illegal in it, but they often do not get advice whether they should sign it or not. Mr. Jones, that is the way leasing works from my point of view.
Than you Mr Kennedy. It does put things in perspective. I guess in the end its what the well produces aand for how long and at what price.
Thanks again for your sound advise
Bob
Can someone please tell me if my mineral property at 157N, 98W section 9 in the Oliver Field is in a 1280 acre spacing or not. Thank you all
Regards
Bob
Mr. Jones, I can tell you your section 9 is spaced with 4 as we would usually call a 1280, but section 4 being the north of the township may not be exactly 640 acres because if the surveyers had any slippage they made it up in the north and west sections of the township. Odds are it’s 1280 give or take a few acres. Hope this helps.
Debra:
I would first see what bonus/acre is offered and target for $2000/acre. The 3 year and 20% is the norm on lease terms for this area.
Charles, there have been offers thrown around anywhere from $500 to maybe $1,000 range. I heard this area is not really being leased heavily yet. I am curious why you think it could possibly lease up to $2,000? Trying to get intelligent information before we do lease with someone. Thank you.
Debra, Has a well been spudded? (are they drilling a well right now?) If they are then $2,000ba should be the floor you consider. We could give you better info if we also knew who the operator was, the unit size, and like I said, if they are drilling now…What County is this in?
Debra:
I am basing this on some minerals in leased over a year ago in T157N;R103W;Section 29 (Just south of yours). I don’t know what has been drilled in the T157N;R102W are but my minerals are close to yours.
Andrew:
These minerals are in Williams County. Marathon just drilled a well on my mineral area in T157N;R103W;Section 31. Several wells have been drilled in my area of Williams County. Again, the area where Debra is located, may be less active but I would start the bonus amount at the top as you can always negotiate down.
If G-3 is planning on drilling the area, they must hold the majority of the minerals in the spacing unit. There can be other operators who hold an interest in a spacing unit but the one who holds the majority can drill the unit. Again, $500 is very low for the bonus but the 3 year, 20% is the norm for the area.