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Title : A Reader Requests An Opinion -- July 26 2018
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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.

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