Mineral Rights in Bakken Under Question

A mineral rights dispute in the Bakken Shale is delaying oil and gas development around Lake Sakakawea.

Related: North Dakota’s Complex Mineral Rights Issues

Continental Resources is asking the courts to clarify mineral ownership for land under Lake Sakakawea. Attorneys for Continental assert in a recent lawsuit that the state and the federal governments both claim ownership to the mineral rights for 93 of the company’s wells. The company is asking the court to allow them to shift the royalty payments for 4,265.791 acres of land to a court-designated depository until the dispute is resolved.

“By reason of these conflicting claims, Continental is in great doubt as to which defendant is entitled to be paid royalties in the disputed lands. Continental doesn’t assert title in the disputed lands, and brings this suit merely to avoid duplicate liability for royalties for the mineral production attributed to the disputed area.” -Continental Complaint

In April, North Dakota legislators approved SB 2134, which affirms that the state does not own minerals under Lake Sakakawea. This put a process in motion to return an estimated $187 million in bonus, rent and royalty payments to private citizens.

The Land Board has gone on record to deny that SB 2134 obligates the agency to rescind its claim to ownership of the mineral estates associated with Disputed Lands. The agency states it is owed $3.786 million in royalties in the disputed areas through June 2017, while the U.S. government claims it is owed $2.818 million in royalties from the same area.

Whiting Sells Bakken Assets for $500 Million

RimRock Buys Bakken Assets

RimRock Oil and Gas gains a foothold in the Bakken with purchase of Williston assets from Whiting. 

Continental Touts Bakken Innovation

Whiting Petroleum has announced it closed last week on the sale of Bakken Shale assets in Dunn and McLean Counties for $500 million. Details of the sale include:

  • 29,637 net acres
  • 29 non-operated drilling spacing units
  • 17 operated units
  • Net daily production from the properties averaged 7,785 BOE/d for 2017 Q2
  • Lease operating expense averaged approximately $12.60 per BOE for the 12 months ending June 30, 2017

Whiting's CEO, James K. Volker said the company will use to proceeds of the sale to pay down $500 million in debt.

The Fort Berthold properties represent only approximately 7% of Whiting’s second quarter total production. The sale provides Whiting additional liquidity to develop its industry-leading properties across the Williston Basin, where the Company estimates it has 4,850 future gross drilling locations.
— James J. Volker, Whiting's Chairman, President and CEO

Continental Touts Bakken Innovation

Continental Q2 2017

Continental Resources reports its Bakken team doubled their rate of return during the second quarter while achieving impressive efficiency gains.

North Dakota Owed Millions in Royalties

During an earnings call this week, Continental executives claim their leadership among U.S. energy companies due to their quality assets and low-cost operations.

Continental reported a net loss of $63.6 million for the second quarter of 2017 at the same time that production increased 6%. The company will increase its capital expenditures for 2017 to between $1.75 billion and $1.95 billion.

Bakken Shale Highlights for Q2

During the second quarter, Continental reported that the rates of return for typical Bakken wells doubled to 82%. The company's Bakken assets set several milestones during the quarter as a result of the 'dedication and ingenuity' of their employees. Bakken Q2 highlights include:

  • Generated over $2 million of added revenue during the first six months
  • Net production averaged 119,861 Boe per day
  • 100 gross (38 net) operated and non-operated Bakken wells
  • 205 gross operated DUCs
  • 19 completions with avg. 24-hour IP rate of 1,606 Boepd
  • Drilling costs in the Bakken are 26% lower than 2016 average
In 2017 our Bakken team has doubled our rate of return and reduced the payout period by 50%, based on our new type curve. This is a step-change improvement in Bakken economics.
— Gary Gould, Senior VP of Production and Resource Development



Hess Cuts Budget for Remainder of 2017

Hess Budget Cuts

The Hess Corporation plans to cut $100 million from its 2017 budget, despite increased Bakken production.

Halcón Resources Corporation to sell Bakken Assets

Hess announced its second quarter results last week that included and a net loss was $449 million. Total production dipped and exectutives 

With regard to the Bakken, we have an industry-leading strategic position with more drilling locations in the core of the play than any other operator. We are currently operating four rigs at 60-stage fracs and increased proppant levels should deliver production growth of approximately 10% a year over the next several years. With our productivity and technology improvements, we now forecast virtually the same production growth with four rigs that would’ve taken six rigs a year ago. We will decide whether to add two additional rigs as originally planned based on an improvement in crude oil prices and the results of our enhanced completions.
— John Hess, CEO

For the full year 2017, we forecast Bakken production to average approximately 105,000 barrels of oil equivalent per day at the high end of our previous guidance of 95,000 barrels to 105,000 barrels of oil equivalent per day due to strong performance by our Bakken team and results of our new completions.

Second Quarter Highlights

  • Net production in the Bakken averaged 108,000 boepd, compared to 106,000 boepd for 2016 Q2
  • Overall net production was 294,000 boepd compared to 313,000 boepd for 2016 Q2
  • Announced plan to sell company interests oil recovery assets in the Permian Basin

E&P capital and exploratory expenditures are projected to be $2.15 billion, down from original guidance of $2.25 billion

North Dakota Owed Millions in Royalties

North Dakota is in a hot dispute with oil and gas companies and industry leaders over improper deductions on royalties owed to the state.

Who Owns Mineral Rights Under North Dakota Lake?

The North Dakota Department of Trust Lands wants to collect millions of dollars in oil and gas royalties that it believes were improperly withheld by oil and gas companies that do business with the state.  The agency found the discrepancy during a recent audit of 19 companies from 2012 through 2014. 10 of those audited were found to have errors, according to Bismark Tribune.

“The bottom line is the companies would like to be able to take deductions because that helps them collect a smaller royalty. But my responsibility and the board’s is to ensure that the lease terms are followed and that we collect for the Common Schools Trust Fund and the other trust funds what they’re entitled.” - Land Commissioner Lance Gaebe

Getting to the bottom of the issue is being hindered because oil companies are hesitant to provide the necessary information. Industry leaders such as The North Dakota Petroleum Council are also pushing back through comments to the board and backing legislative action.

Read more at Bismark Tribune