Clarification On Recent Discussion Over At The Discussion Group -- July 4, 2015

Over at the Discussion Group board, a reader clarifies a significant point with regard to "leases" and "permits" with regard to a discussion on expiring permits or leases.

Once a drilling unit has a well, that drilling unit lease is "held by production."

A productive well on a drilling unit will hold that lease by production, and subsequent wells in that same drilling unit will have the same conditions as the original lease. However, new wells still require a permit from the NDIC to be drilled. Permits are good for one year.

However, remember, in North Dakota, two wells could be sited next to each other and one could be on a 1280-acre drilling unit and one could be on a 2560-acre overlapping unit. I do not know if a well on a 1280-acre drilling unit "holds by production" a overlapping unit that does not yet have a well. I would assume that when one leases one's mineral rights, it does not matter the size of the drilling unit, once oil is produced from one's minerals.

At least that's my understanding, of what I know and don't know. I don't own any minerals so I can't say for sure if this is correct, nor can I say whether I have articulated it correctly. Do not make any decisions, financial, investment, travel, or otherwise, based on anything you read at this site or think you may have read at this site. If this information is important to you, go to the source.

Remember: another discussion group that tackles these and similar questions is the "Mineral Rights Forum." If one searches the net, one can find many, many sources; many, many opinions.