Notice: The State of North Dakota is offering one (1) tract for lease containing 80.00 net / 160.00 gross acres. The lease offered will have a 3/16th royalty rate and will be effective November 3, 2015. The acreage is included in the Bissonnette 1,294.24-acre unit.
SM Energy Company has submitted an AFE to drill and complete the Bissonnette 14B-31HS, a single lateral horizontal well, to test the Bakken formation at an approximate total vertical depth of 8,933'. The successful bidder will have the option to participate in the proposed AFE with a 6.181234% WI or decline to join the AFE and be subject to the risk penalty (Non-Consent Provisions) described below. The risk penalty will not apply if the successful bidder joins the AFE. Please click the following link to view the AFE.
AFE: Bissonnette 14B-31HS
Operator Statement Regarding AFE: Subject to rig availability, SM Energy Company anticipates a spud date on or before October 30, 2015. If SM Energy or it's representative is not the successful bidder, then this AFE will be offered to the successful bidder. The new lessee will have, within thirty (30) days of November 12, 2015, to indicate their election to either participate or not participate in the Bissonnette 14B-31HS well.
Area Activity Map
Completions from the last 365 days in Divide County, North Dakota
source: www.drillinginfo.com
Drilling Permits from the last 365 days in Divide County, North Dakota
source: www.drillinginfo.com
Drilling Rigs on Location in Divide County, North Dakota
source: www.drillinginfo.com
North Dakota Drilling Non-Consent Provisions
Provided certain conditions are satisfied,
NDCC 38-08-08 allows the owner to impose a penalty on other interests in the well's spacing unit if those other interests decline to join in the risks and costs of drilling.
The North Dakota Industrial Commission oversees application of the risk penalty law and has adopted a rule to implement it. The rule is found in
Section 43-02-03-16.3 of the NDAC.
NDCC 38-08-08 states that if the nonparticipating owner's interest is not subject to a lease, the risk penalty is 50%, and that if the nonparticipating owner's interest is derived from a lease, the risk penalty is 200%. These risk penalty percentages are applied to the nonparticipating owner's share of the reasonable actual costs of drilling and completing the well, and may be recovered only out of production from the pooled spacing unit.
In order to enforce a risk penalty, the owner, must make an unsuccessful, good faith attempt to have the unleased owner execute a lease - or - must make an unsuccessful, good faith attempt to have the leased owner join in and participate in the risk and cost of drilling. "Good faith attempt" is more fully described in
NDAC 43-02-03-16.3.
As it pertains to Lease OG-15-00806, the Commissioner of University & School Lands cannot warrant which risk penalty will be assessed for non-participation.
The procedures and process outlined in
NDCC 38-08-08 and
NDAC 43-02-03-16.3 should be referenced and followed. Risk penalty disputes are decided by the North Dakota Industrial Commission. A dispute whether a risk penalty attaches to Lease OG-15-00806 and their interests, and if so the amount of the risk penalty, would be addressed at a hearing held by the Industrial Commission.
Notice: A 2% Buyer Premium, calculated as 2% of the total bonus, will be added to the cost of this lease.
Contact Information
North Dakota
Drew A. Combs
Director of Minerals Management
1707 N. 9th St. - PO Box 5523
Bismarck, ND 58501
(701) 328-1909
Diane M. Nelson
Land Professional
1707 N. 9th St. - PO Box 5523
Bismarck, ND 58501
(701) 328-2802
EnergyNet
John S. Munroe
VP of Engineering / Government Lease Sales
440 Louisiana, Suite 600
Houston, TX 77002
(832) 403-3122
Gus Rivero
Manager of Government Lease Sales
7201 I-40 West, Suite 319
Amarillo, TX 79106
(806) 463-3616
