ND Oil and Gas Advice Column
Bakken Gal

United States

#640 Sep 10, 2012
How is production in the St. Anthony Field in Dunn County? We own mineral interests in this field and are interested in hearing how the production has been on the wells. We heard that drilling will begin on Section 21, Township 141, Range 96...how do we know its not just a rummor?
kennedy 817

Hurst, TX

#641 Sep 11, 2012
Bakken Gal, Anshutz drilled a well in that location in 2005 which is now plugged and abandoned afer producing just under 17k barrels of oil. There is oil there and techniques to get the oil out of the ground improve frequently. If you want to keep an eye on what is happening in the area you should use the GIS map on the NDIC O&G Division website. Permitted wells are indicated by a yellow/ orange dot. I saw no permit dots in that spacing but permits are vey easy to getad cost only $100, that's about eight cents an acre for a 1280 acre spacing. good luck in the future
Chuck

Antigo, WI

#642 Sep 13, 2012
Minnesota Hillbilly wrote:
<quoted text>
Yes, east and a bit south is where my mineral acres are located and I've been notified I have interest in one well and a second is scheduled to start drilling August first.
It sounds like there are a lot of wells in the area, so you are in a good bargaining position with your lease. Do some serious research to find out what the current deals are. I suspect some may be getting way more than what you are being offered, but I don't know.
Just make sure you sign with a good company.
Don't know if you are still active on this board - which I just stumbled on. I have acreage in Burke County that is "in play" for leasing (a 5 year Empire lease expired last fall). Since I live in Faribault, interested in lunch some day to compare notes and info?
Hairold

Wolf Point, MT

#643 Sep 17, 2012
If your looking for help aquiring a lease email me at ndleaseassistance@yahoo.com and I will see what I can come up with...Have a great day. I have not done any leases in Burke county but I can find out.
Paul

West Fargo, ND

#644 Sep 21, 2012
Hello, I have a company approaching me about placing an oil pipeline through a section of my land in Dunn County. They haven't given any numbers/rod yet; so my question to you is what would be a fair price so I know I am being taken advantage of?

Thanks,

Paul
Paul

West Fargo, ND

#645 Sep 21, 2012
Wow, I mean, so I am not taken advantage of. Hate it when brain works faster than fingers.
Dug

Libby, MT

#646 Sep 21, 2012
anyone know anything aboutNewfield Prodution????
kennedy 817

Hurst, TX

#647 Sep 21, 2012
Paul, the price for pipeline per rod varies, can depend on the size of the pipeline, although those negotiating for the easement will tell you size does not matter. I was just talking to someone who was offered $80 per rod for a simple gathering pipeline. I told them that the price per rod is less important than the terms of the pipeline easement. I would want the pipeline owner to indemnify me against lawsuits, single use easement [one pipe], permanent easement to be the width of the pipe, pipe to be buried below plough depth, do not grant exclusive rights to cross your land because someone else may need an easement from you in the future, be it another pipeline or water or electricity easement. If you grant exclusive rights then nobody else can cross your land without paying the owner of the first easement. Your property will be worth less than before with a pipeline crossing it, make sure that payment includes diminished value. No surface appurtenances, you don't want anything sticking above ground reducing your property value more and a pipe is simple, a pumping station or valves increase the risk of something going wrong. I would want a one time damages payment for the pipeline to cross my land and a yearly rental payment of at least $2,000 a year or more depending on length because the pipeline may be in use for 50 years or more, I'll let you do the math. I just scratched the surface. I suggest you do a search for pipeline easement terms, you may want to get professional help in negotiating, but find out all you can first so you can keep an eye on the help you hire and if they don't add anything to what you have learned, they weren't on your side to begin with but a professional could help you maximize your money received and protect you from future risks. Good luck to you.
Paul

West Fargo, ND

#648 Sep 28, 2012
Thanks Kennedy. Quick question for you or anyone who may know; is that $80/ rod up here in the Dunn county North Dakota area? And yes on the easement I was told to get all I can for that and for damages. But was told the $80 may be a bit low.

Thanks
Hairold

Wolf Point, MT

#649 Oct 1, 2012
I know the price up in north Williams county is around 50.00 per rod for each pipe...my friends dad just done one and also a guy I know also works on getting easements. My sister and her husband I believe are going for a yearly rental plus some other money, some of theirs are oil, some water, some gas..
Paul wrote:
Thanks Kennedy. Quick question for you or anyone who may know; is that $80/ rod up here in the Dunn county North Dakota area? And yes on the easement I was told to get all I can for that and for damages. But was told the $80 may be a bit low.But yeah Kennedy is right the terms are always more to think about then the money usually on any sort of lease.
Thanks
gabriel

Fountain Hills, AZ

#650 Oct 1, 2012
Does anyone know what fair Market value is on gas produced by an oil well
kennedy 817

Hurst, TX

#651 Oct 9, 2012
Paul, sorry I have not gotten back to you sooner. Yes, you could negotiate for $80 a rod in Dunn county for a simple 4 inch gathering line, more for a larger line, but as I said I would want more than that anyway for property depreciation and damages and a yearly rental payment pegged to the consumer price index. $2,000 a year today could be $10,000 a year 50 years from today if pegged to the consumer price index. If the property is just scrub and not farmed or what have you and of little interest you could lease them a little more of it for more money, such as multiple uses, larger permanent easement but that would be losing longterm as the value of future easements will probably rise in the future.
Bakken Gal

Arvada, CO

#652 Oct 15, 2012
Thank you for the information, I'll check out the website!
Bakken Gal wrote:
How is production in the St. Anthony Field in Dunn County? We own mineral interests in this field and are interested in hearing how the production has been on the wells. We heard that drilling will begin on Section 21, Township 141, Range 96...how do we know its not just a rummor?
kenedy 817

Hurst, TX

#653 Nov 3, 2012
Gabriel, the vale of the gas is fined by its constituen parts. Dry gas, which is methane is ow in value. Rich "wet" gas is more valuable because it contains liquids, natural gasoline, propane, butane, pentane, hexane and so forth. The gas from ND wells seems to be generally very rich. My gas, with the natral gasoline removed and sold separately usually sells for between 4 and 6 dollars per 1,000 cubic foot. Considering, I know people in Texas who are receiving royalty based on a sale price of less than $2 per 1,000 cubic foot for their mostly dry gas, I consider myself lucky. I can't talk about gas without making a warning about leasing to Chesapeake, one of the largest gas producers. Chesapeake makes sweetheart deals selling gas from the wells to a subsidiary below normal market price and pays royalty according to this lower price and charging the maximum allowed in production and marketing costs allowable against the mineral owners royalty. I know of one case where a man had been receiving checks exceeding $1k per month for years from Chesapeake and now his checks are less than $200 per month and it isn't because production has fallen but because chesapeake has reinterpreted the way they calculate his royalty. The reason for this is because Chesapeake is in financial trouble and needs every dime they can scrape up. Chesapeake also knows that unless you didn't need the money to begin with that you can't afford the $100,000 plus the lawsuit would cost. I have a friend that did lease to Chesapeake through one of their intermediaries Blanca Peake and the best we can think to do is pray that te lease expires with no drilling. I don't want anyone to take my word for it, search Chesapeake for yourself and be careful who you lease to. Good luck to all.
gabriel

Fountain Hills, AZ

#654 Nov 3, 2012
kenedy 817 wrote:
Gabriel, the vale of the gas is fined by its constituen parts. Dry gas, which is methane is ow in value. Rich "wet" gas is more valuable because it contains liquids, natural gasoline, propane, butane, pentane, hexane and so forth. The gas from ND wells seems to be generally very rich. My gas, with the natral gasoline removed and sold separately usually sells for between 4 and 6 dollars per 1,000 cubic foot. Considering, I know people in Texas who are receiving royalty based on a sale price of less than $2 per 1,000 cubic foot for their mostly dry gas, I consider myself lucky. I can't talk about gas without making a warning about leasing to Chesapeake, one of the largest gas producers. Chesapeake makes sweetheart deals selling gas from the wells to a subsidiary below normal market price and pays royalty according to this lower price and charging the maximum allowed in production and marketing costs allowable against the mineral owners royalty. I know of one case where a man had been receiving checks exceeding $1k per month for years from Chesapeake and now his checks are less than $200 per month and it isn't because production has fallen but because chesapeake has reinterpreted the way they calculate his royalty. The reason for this is because Chesapeake is in financial trouble and needs every dime they can scrape up. Chesapeake also knows that unless you didn't need the money to begin with that you can't afford the $100,000 plus the lawsuit would cost. I have a friend that did lease to Chesapeake through one of their intermediaries Blanca Peake and the best we can think to do is pray that te lease expires with no drilling. I don't want anyone to take my word for it, search Chesapeake for yourself and be careful who you lease to. Good luck to all.
So our lease is with eog and our lease clearly states that we would get fair market value for any gas produced with the oil well and we are not getting anything this is why I would like to find out what fair market value should be
kennedy 817

Hurst, TX

#655 Nov 15, 2012
Gabriel, the thing is that royalty is paid on gs produced and SOLD. If the gas is flared, just burned off because there is not a pipeline or lacking a buyer, you get nothing for it beause it was not sold. This is common throughout the industry. If you could provide the legal description I could check to see if any gas has been sold, how much has been produced and flared off. If they are just flaring off your gas, you are not alone. I have a friend with a fairly new well not on a gathering line and the operator was flaring $125,000 worth of gas per month in the first couple months. The operator would be hampeed in producing oil if they can't flare or have someplace to send the gas. I believe that the operators get to deduct depletion for gas flared and the lessor mineral owners do not. Te flaring of the gas is a terrible waste and there isn't anythng we can o about it. Industry has noticed this waste and new gas plants are being constructed which will increase the market and hopefully will increase the sales of gas. The state I beleve will allow flaring of gas for up to 1 year including extentions. Remember that the state taxes gas, but I believe that the state taxes it when it's sold and when it is flared the state makes nothing off the gas. It is also too bad that the wells produce the most gas when they are brand new and not hooked up to gathering lines and that frequently gas production has fallen to 1/4 of what it was by the time a gathering line is in place to colect and sell the gas. I hope this helps your understanding. If you need help finding out the production or think your gas was sold and you haven't been paid, post your legal description, twp,range,section and I will look up the numbers for you. I hope this helps.
gabriel

Mesa, AZ

#656 Nov 15, 2012
kennedy 817 wrote:
Gabriel, the thing is that royalty is paid on gs produced and SOLD. If the gas is flared, just burned off because there is not a pipeline or lacking a buyer, you get nothing for it beause it was not sold. This is common throughout the industry. If you could provide the legal description I could check to see if any gas has been sold, how much has been produced and flared off. If they are just flaring off your gas, you are not alone. I have a friend with a fairly new well not on a gathering line and the operator was flaring $125,000 worth of gas per month in the first couple months. The operator would be hampeed in producing oil if they can't flare or have someplace to send the gas. I believe that the operators get to deduct depletion for gas flared and the lessor mineral owners do not. Te flaring of the gas is a terrible waste and there isn't anythng we can o about it. Industry has noticed this waste and new gas plants are being constructed which will increase the market and hopefully will increase the sales of gas. The state I beleve will allow flaring of gas for up to 1 year including extentions. Remember that the state taxes gas, but I believe that the state taxes it when it's sold and when it is flared the state makes nothing off the gas. It is also too bad that the wells produce the most gas when they are brand new and not hooked up to gathering lines and that frequently gas production has fallen to 1/4 of what it was by the time a gathering line is in place to colect and sell the gas. I hope this helps your understanding. If you need help finding out the production or think your gas was sold and you haven't been paid, post your legal description, twp,range,section and I will look up the numbers for you. I hope this helps.
The gas has been sold however last month for example on one well and this is happening on all wells we have. The price per million cubic feet was 7.45 and then I was charged the exact amount under the column "other deducts" so that the amount paid to me was zero and my lease states that it will be gathered free of charge to me. This is what I am not understanding also note that the price is per million cubic foot and not per thousand seems a bit low to me and not sure why I am being charged this unknown tax or fee to where I end up w with nothing
kennedy 817

Hurst, TX

#657 Nov 17, 2012
Gabriel, the use of M n MCF means thousand MMCF is million, if you ddn't know. The fact that you were charged the exact amount for deducts makes me think there had been an accounting error or more than one error and that they were making a correction. Now for the "possibly" bad news. The common cost free language of even a few years ago no longer works. Some fairly recent court decisions have said that cost free means that you don't have to pay for part of the well and not that you are not to be charged for gathering, compressing, dehydrating, separating and transporting/marketing. The judges are bought. Unless your lease says explicitly no deducts and lists all of them, it's probably voluntary on the operators part if they honor the intent or not. To the best of my knowledge EOG has been honoring the intent. I think the most likely reason is an accounting error. I think you will have to call EOG and work it out. In oil and gas it seem that lawyers do not add much to the discussion until the amount in question is more than the cost of the court battle and that is probably $50k to $100k, don't ask me how I know. Let me know how things work out. If EOG doesn't fix things this may be the first sign that they are going the way of Chesapeake who in many cases has quit paying royalties because few people have the resources to sue them and frequently the amounts are small enought that even those who do have the resources won't because it's not worth it.
gabriel

Mesa, AZ

#658 Nov 17, 2012
Thank you for all your help I will keep you posted as to what happens I will be contacting eog again thsbk you for your help
SeattleMarty

Seattle, WA

#659 Dec 7, 2012
I recently inherited some gas and oil rights in Dunn County and have some legal questions. Can someone recommend an attorney? Thanks...

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