Bakken, Three Forks · North Dakota · Montana
Major tight oil formation in the northern Great Plains — among the highest-volume producing counties in the nation.
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Continental Resources filed a forced pooling application for a 1,280-acre unit in McKenzie County where I own 40 NMA unleased. The NDIC application shows estimated capital costs of $12.4M. If I don't respond in 30 days and get pooled involuntarily, what does the risk penalty actually mean for my payments?
Under N.D.C.C. §38-08-08, if you fail to elect within the statutory window and are involuntarily pooled, North Dakota applies a 'risk penalty' — typically 150% of your proportionate capital costs. Here is your math: Your proportionate share = 40 NMA ÷ 1,280 total unit acres = 3.125%. Your capital cost share = 3.125% × $12,400,000 = $387,500. Risk penalty (150%) = $387,500 × 1.5 = $581,250 total holdback from your production. This $581,250 would be withheld from your royalty/production share until recovered by the operator before you see a single dollar. At current Bakken prices and your 3.125% interest, recovery could take 18–36 months depending on production rates. You have better options — respond to that notice NOW. What are the royalty options offered in the application?