Thursday, July 26, 2018

A Reader Requests An Opinion -- July 26, 2018

For various reasons, I don't want to be more specific with regard to this issue.

A reader inherited mineral rights in one of the areas marked with an oval and labeled, A - E.

The other areas, numerically identified, are there for comparison.

The reader wanted to know whether:
  • it was likely the operator would be drilling any time soon in those areas, A - E
  • for areas A- E would be it better: holding for the royalties in the future, or selling now for cash, and forgoing future royalties (i.e, sell or hold)
My thoughts:
  • the area is northeast of Williston and has been seen to be a fairly good location, perhaps not as good as the best Bakken but certainly quite nice areas: East Fork, Stony Creek, Epping
  • each of those areas, in fact, from my point of view, have been great oil fields -- not something I would easily give up
  • the reader should note that an operator currently has a rig on #34465,  ]in the immediate area -- which suggests to me that operators are going to continue drilling this area
  • without mentioning the name of the operator the reader mentioned, I can say that of all the operators in the Bakken, I would be happy with this operator
  • daily activity reports suggest operators are getting more aggressive (rather than less aggressive) drilling in the Tier 1 locations in the Bakken) with the price of WTI trending up; and, choke points in the Permian making the Bakken look more attractive than the Permian
Every individual's situation is different.

My advice:
  • anecdotally, it's been my experience that folks who have sold their mineral rights in the Bakken, later regret it;
  • if one needs the money now, and has no heirs, selling the mineral rights might be the right thing to do;
  • if one does not need the money now, and has no heirs, I would still probably keep the mineral rights;
  • if one does not need the money now, and has heirs, I would definitely keep the mineral rights;
  • as the operator gets closer and closer to drilling this area, the offers to buy the mineral rights will increase and the offers will get better;
  • the reader should look at the production profiles of the recently drilled wells (permits in the 3XXXX range);
  • I am pretty confident that at some point, in each 1280-acre drilling unit, there will be:
    • a minimum of 6 middle Bakken wells
    • a minimum of 12 Three Forks wells, spread among the three upper benches
  • operators drilling in the Bakken these days generally have an expectation of EURs of one million bbls/well, certainly in the areas noted above.
I'm curious what others might think.

Reply anonymously in the comment section or directly to my e-mail address which can be found at the sidebar at the right.

Disclaimer: one has to assume that all readers who respond are simply providing an opinion and cannot be held "liable" for their advice. I don't see this as anyone, including me, giving any advice, simply giving an opinion.

The Ledecky Page
How Can The AP Get Such A Simple Story So Screwed Up?

Katie Ledecky wins her second of two events.

Yesterday (Wednesday), Katie took first in the 800-meter freestyle.

Just minutes ago it was reported that Katie won the 200-meter freestyle.

200-meter freestyle (note this was from the linked AP site -- completely messed up):
  • Katie takes first, 1:55.82 -- that is the second-fastest time in the world in this event; Katie holds the world record which she set last month, at a time of 1:54.66
  • second place was won by three-time Olympian champion Allison Schmitt, clocking in at 1:54.60
Obviously the linked AP story has errors; waiting for corrections. [Wow, the AP story really appears to be "screwed up." See below, from SwimSwam].

Later: it looks like SwimSwam has it correct, regarding the 200-meter freestyle:
  • world record is held by Federica Pellegrini, 1:52.98, set in 2009 (if accurate Katie does not hold the record as stated above; confirmed at wiki)
  • today:
    • Katie Ledecky, first at 1:54.60 (which would be better than her June time of 1:54.66 if that is accurate from the story above)
    • Allison Schmitt, second at 1:55.82


  1. My grandparents held their royalties for years after their retirement because of the Bakken potential. My family is now reaping the benefits.
    All that to say, my perspective is that Mineral Rights are not held for the present, but the future.
    My advise is not hold and not sell-

    1. Not sure what you mean by "not hold and not sell."

      The reader is wondering whether he/she should sell his/her mineral rights to inherited mineral acres, or whether she/he should "hold" unto them (in other words, keep them).

      Sell them or keep them?

    2. They should definitely keep their minerals. The Bakken is a long term play. There will likely be numerous wells drilled on their acres over time. They will surely reap the benefits.

    3. Thank you. I agree completely about the long term prospects of the Bakken.

  2. If those who offer to buy minerals weren’t convinced they are worth much more than what they are offering to pay, they wouldn’t work so hard at it. Every time we have wells about to begin production in a new spacing unit, there’s a rush of offers. There are letters, fancy packets and often high pressure phone calls. As soon as the checks start, they know we know what the oil and gas are worth and that not interested. Only if one really needs the money now and is willing to take considerably less in the long run should one consider selling minerals in the Bakken.

    1. Very, very interesting. Thank you. I can only imagine the pressure ... and it must have been incredibly difficult during the "Depression" back in the 1930's for a lot of our grandparents.

  3. I should add, if I wanted to sell minerals, I’d get three or more companies bidding against each other. Then you’d be more likely to get a good price.

    1. Agree 100%. And the blog has listed many "landmen" buying mineral acres.

  4. Replies
    1. The context of your note suggested that, but I did not want to put words into your reply. Appreciate the clarification. I agree with your analysis, as stated earlier.

  5. Hi, I’m the mineral holder. Thank you for all replies. I appreciate your perspectives. The quandary I have had is for a long time the royalties did virtually nothing. Then, fracking came about. We were offered a lease by Continental. With a 20 percent. I own only 16.67 acres on the 128 acres parcel. The checks were good when the lease started. Up to 800 a month. However, it went down to the high 100’s. It has gone up a little recently. But not much. Then we got offers. We are now up to $120k for the purchase of our leased rights. We were told that we would have up to 6 wells inside of ten years when we signed in 2013. We are at year 5 and just the 1 well. I’m disappointed in the lack of progress. But am willing to hold on and wait if they are saying it will happen, but I can’t get Continental to call me back. I thought if they are holding at the 1 well it might be worth it to sell. By doing the math the 120k looked attractive. The minerals were inherited from my grandfather who homesteaded.

    1. That would be tough to "pass" on $120K. It certainly tells folks how much professionals think the minerals are worth.

      No operator will tell you their plans: the oil industry is a very, very close hold. Again, it all depends on your specific circumstances whether to buy or sell. It's easy for young folks to say hold on -- lots of time to wait, whereas older folks would like to see the money now.

      Good luck, regardless how it turns out.

  6. That is true. It seems that information about wells is very private. That’s frustrating. I can hold it, we don’t need the money now. It would be nice to have a cushion. However, my bigger concern was not ever seeing it this good again. Not seeing this kind of offer ever again and passing/giving up a good amount of money. If people in the know think that there is a good chance that we will see better activity, then I would be a fool to sell. I would just like Continental to share their plans.

    1. I understand -- every day I am glad I don't have to make those decisions.