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Old 02-14-2013, 11:04 PM
 
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Is the state getting profits from the oil or did some large Corporation purchase the land and rights to all the oil? Thanks
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Old 02-15-2013, 07:46 AM
 
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Originally Posted by westcoastforme View Post
Is the state getting profits from the oil or did some large Corporation purchase the land and rights to all the oil? Thanks
Only in rare cases do the oil companies own the mineral rights to the oil. Oil companies get leases from mineral rights owners that last for three years (sometimes with extensions), and if oil is found, the oil company has the right to drill more wells for as long as oil is flowing.

Surface rights and mineral rights were originally together, but can be sold separately. During poor agricultural times, farmers and ranchers may have sold off their mineral rights to save their farm or ranch. Other times, the two rights may have been separated during a sale, as the original owner wanted to keep the mineral rights.

The Bakken mineral rights are largely owned by individuals, but also includes the state government, a school trust (schools were allocated about 1/16th of all mineral rights in ND), Federal government (like the national grasslands - national parks are not leased), Tribal government (Forth Berthold reservation owns trust land, which was leased and bringing in a lot of dollars for the three affiliated tribes), as well as some railroads (the Northern Pacific was allocated land by the government to finance a transcontinental railroad). In the railroad case, Northern Pacific became Burlington Northern, which later spun off some of its mineral rights into another company: Burlington Northern Resources. In turn, that company was bought out by Conoco Phillips. So in that case, Conoco Phillips likely does own (not lease) much of its Bakken holdings.

When obtaining a lease, an oil company usually makes a one-time payment (sometimes $10,000 an acre for high potential land, sometimes $500 an acre for less than prime mineral rights). If oil is found, the mineral rights owner typically gets 20% of the oil and gas revenue. For a person that has 640 acres, and 1000 bpd from multiple wells, that would be about $500,000 a month in royalties.

The state government also applies a 12.5 extraction tax, so the state get about $300,000 a month from the 640 acre illustration above. The oil company keeps $1.7 million in revenue a month (not profit), but they need to pay off the original lease (likely $6,400,000 for that section of land) as well as maybe as much as $40,000,000 to drill four wells.

There are surface rights owners who are getting very wealthy, and the state of ND is pulling in huge revenues from the extraction tax, from their land holdings, from retail taxes on oil company purchases (which are huge). Counties are gaining from property taxes on oil company buildings/processing plants.
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Old 02-21-2013, 02:52 AM
 
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Ok good deal. Thanks for the information!!
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Old 02-22-2013, 04:14 PM
 
1,922 posts, read 1,439,028 times
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Originally Posted by fourwinds View Post
Only in rare cases do the oil companies own the mineral rights to the oil. Oil companies get leases from mineral rights owners that last for three years (sometimes with extensions), and if oil is found, the oil company has the right to drill more wells for as long as oil is flowing.

Surface rights and mineral rights were originally together, but can be sold separately. During poor agricultural times, farmers and ranchers may have sold off their mineral rights to save their farm or ranch. Other times, the two rights may have been separated during a sale, as the original owner wanted to keep the mineral rights.

The Bakken mineral rights are largely owned by individuals, but also includes the state government, a school trust (schools were allocated about 1/16th of all mineral rights in ND), Federal government (like the national grasslands - national parks are not leased), Tribal government (Forth Berthold reservation owns trust land, which was leased and bringing in a lot of dollars for the three affiliated tribes), as well as some railroads (the Northern Pacific was allocated land by the government to finance a transcontinental railroad). In the railroad case, Northern Pacific became Burlington Northern, which later spun off some of its mineral rights into another company: Burlington Northern Resources. In turn, that company was bought out by Conoco Phillips. So in that case, Conoco Phillips likely does own (not lease) much of its Bakken holdings.

When obtaining a lease, an oil company usually makes a one-time payment (sometimes $10,000 an acre for high potential land, sometimes $500 an acre for less than prime mineral rights). If oil is found, the mineral rights owner typically gets 20% of the oil and gas revenue. For a person that has 640 acres, and 1000 bpd from multiple wells, that would be about $500,000 a month in royalties.

The state government also applies a 12.5 extraction tax, so the state get about $300,000 a month from the 640 acre illustration above. The oil company keeps $1.7 million in revenue a month (not profit), but they need to pay off the original lease (likely $6,400,000 for that section of land) as well as maybe as much as $40,000,000 to drill four wells.

There are surface rights owners who are getting very wealthy, and the state of ND is pulling in huge revenues from the extraction tax, from their land holdings, from retail taxes on oil company purchases (which are huge). Counties are gaining from property taxes on oil company buildings/processing plants.

What an informative post.
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