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For Sale 

Seven (7) Separate Oil, Gas, and Other Mineral Interests in North Dakota 

Sale Overview 

FOR SALE:

 

Seven (7) Separate Oil, Gas, and Other Mineral Interests located in North Dakota. Current Operators include XTO Energy, Murex Petroleum, and Oasis Petroleum

 

Sale conducted by HyperAMS, LLC on behalf of Lutheran Social Services of North Dakota, By order of U.S. Bankruptcy Court, District of North Dakota (Fargo), Petition 21-30203

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An APA has been executed with a Stalking Horse. Qualified bids must exceed the Stalking Horse purchase amount plus the Break Up Fee.

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LOCATION: 

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NORTH DAKOTA:

Divide County: Four (4) Parcels

Burke County: One (1) Parcel

McKenzie County: One (1) Parcel

Billings County: One (1) Parcel

 

DATES:

 

Qualified Bid Submission: December 15, 2021

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Auction: December 16, 2021

 

Transaction Closing As Soon as Possible after Sale Approval Hearing


Sale Contact:

For questions regarding this sale, please contact Chief Operating and Financial Officer Bob Pabst at  (847) 499-7023 or rpabst@hyperams.com.

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Mineral Interest Details

During its numerous years of operation, LSS acquired seven (7) separate oil, gas, and other mineral interests located in North Dakota (together, the “Mineral Interests”). 

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1. On or around July 5, 1966, LSS acquired a 10% property interest (or 4 acres of property) in Divide County, North Dakota, from the estate of Ed Ellefson described as:

 

An undivided one-fourth (1/4) right, title and interest in and to the oil, gas and other minerals in and under and that may be produced from the Northeast Quarter (NE ¼) of Section Twenty-Nine (29), in Township One Hundred Sixty-three (163) North, of Range One Hundred One (101), West of the Fifth Principal Meridian, Divide County, North Dakota.

 

After receiving this interest, LSS began leasing the interest to Plains Oil & Gas, Inc., on August 20, 1982, receiving $200 per acre for the first year and $1 per acre for the following 4 years with a 1/6 royalty.  No current lease or other agreement for Mineral Interests have been identified.

 

2. On or around July 5, 1966, LSS acquired an additional 10% (or 12 acres in property) from the estate of Ed Ellefson described as:

 

An undivided three-fourths (3/4) right, title and interest in and to the oil, gas and other minerals in and under and that may be produced from the Northeast Quarter (NE ¼) of Section Thirty-two (32), in Township One Hundred Sixty-three (163) North, of Range One Hundred One (101), West of the Fifth Principal Meridian, Divide County, North Dakota.

 

LSS originally leased this interest to Louisiana Land and Exploration Co. on August 17, 1982, for 5 years, receiving $250 per acre for the first year and $1 per acre for the following 4 years with a 1/6 royalty.  LSS later leased this interest to LoneTree Energy & Associates LLC on February 5, 2005, in exchange for $50 per net acres for 3 years and a 1/6 royalty, along with an option to extend the lease for an additional 2 years for the additional consideration of $10 per net acre.  No current lease or other agreement for Mineral Interests have been identified.

 

3. On or around July 5, 1966, LSS acquired an additional 10% (or 19.99 acres in property) from the estate of Ed Ellefson described as:

 

All the oil, gas and other minerals in and under and that may be produced from the South Half of the Northwest Quarter (S1/2 NW1/4), Southwest Quarter of the Northeast Quarter (SW1/4 NE 1/4), Lots Two (2) and Three (3), ALL in Section Five (5), Township One Hundred Sixty-one (161) North, of Range One Hundred One (101), West of the Fifth Principal Meridian, Divide County, North Dakota.

 

LSS thereafter leased this interest to Atlantic Richfield Co. on February 13, 1985, for a five-year term, receiving in exchange $115 per acre for the first year and $1 per acre for the following 4 years with a 15% royalty.  LSS currently leases this interest to B.J. Kadrmas, Inc.; in exchange for this interest, LSS receives one-eighth (1/8) of the gross proceeds each year, payable quarterly, for the gas from each well where gas only is found, while the same is being used off the premises, and if used in the manufacture of gasoline a royalty of one-eighth (1/8), payable monthly at the prevailing market rate for gas.

 

4. On or around July 5, 1966, LSS acquired an additional 7.5% interest in property from the estate of Ed Ellefson described as:

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An undivided three-fourth (3/4) right, title and interest in and to all the oil, gas and other minerals in and under and that may be produced from the Southeast Quarter of the Southwest Quarter (SE1/4 SW1/4), the North Half of the Southeast Quarter (N1/2 SE1/4) and the Southwest quarter of the Southeast Quarter (SW1/4 SE1/4) of Section Twenty-four (24) in Township One Hundred Sixty-two (162) North, of Range One Hundred Two (102), West of the Fifth Principal Meridian, Divide County, North Dakota.

 

No current lease or other agreement for Mineral Interests have been identified.

 

5. In 1966, LSS acquired an interest in 120 acres of property from the estate of Goro Ronning described as:

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An undivided one-third (1/3) right, title and interest in and to the oil, gas and other minerals lying under the NE 1/4 of Section 7; NE 1/4 SE 1/4 NW 1/4 SE 1/4 S 1/2 SE 1/4 of Section 19; NE 1/4 NE 1/4 of Section 30, all in Township One Hundred Sixty-one (161) North, Range 92 West, Burke County, North Dakota.

 

LSS originally leased this interest to Empire Oil Company on January 21, 2005, for a five-year term in exchange for $40 per net acre and a 15% royalty.  Later, on April 1, 2005, LSS filed a Statement of Mineral Claim for Section 19 and Section 30.  LSS currently leases this interest to Sundance Oil & Gas, Inc.; in exchange for this interest, LSS receives one-sixth (1/6) of the gross proceeds each year, payable quarterly, for the gas from each well where gas only is found, while the same is being used off the premises, and if used in the manufacture of gasoline a royalty of one-sixth (1/6), payable monthly at the prevailing market rate for gas.

 

6. On or around June 27, 1994, LSS acquired an additional 1/64 interest in 320 acres of property (5 acres) from the Alta E. Bjornseth Trust described as:

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An undivided One sixty-fourth (1/64) interest in and to all of the oil, gas, casinghead gas, casinghead gasoline and other minerals in and under and that may be produced from the following described lands situated in Billings County, State of North Dakota, to wit:

 

Township 143 North, Range 98 West

Section 2: SE1/4

Section 12: NW1/4

 

LSS leased this interest to Empire Oil Co. on February 17, 1887 for a five-year term in exchange for a 1/6 royalty.  No current lease or other agreement for Mineral Interests have been identified.

 

7. In 2005 LSS acquired a 1/5 (20%) (or 5 acres in property) from the estate of Esther J. Adams described as:

 

Township 150 North, Range 98 West

Section 15: SW 1/4

Section 21: NE 1/4

Section 22: NE 1/4.

 

LSS leased this interest to Powers Energy Corp. on July 7, 2005, in exchange for a 1/5 royalty. LSS currently leases this interest to Powers Energy Corporation; in exchange for this interest, LSS receives 17% royalty.

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Qualified Bid and Bid Deadline

Any person that wishes to bid at the Auction must no later than 5:00 p.m. (Central) on December 15, 2021submit via e-mail to Tom Pabst at tpabst@hyperams.com, with a copy to LSS’s counsel Fredrikson & Byron, P.A., Attn: Steven R. Kinsella at skinsella@fredlaw.com, and LSS’s Chief Restructuring Officer Lighthouse Management Group Inc., Attn: Alex J. Dybsky at adybsky@lighthousemanagement.com, a package (collectively, a “Bid Package”) that includes all of the following items:

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a.      A signed non-disclosure agreement in the form provided by HYPERAMS.

b.      The identity of the party submitting the bid and any other party participating in such bid.

c.       A written acknowledgment that the submitting party agrees to all of the terms set forth in these Bidding Procedures.

d.      Written evidence that the submitting party has obtained authorization and approval from its board of directors (or comparable governing body) with respect to the submission of its bid and acceptance of the terms of sale set forth in these Bidding Procedures, or representation that no such authorization or approval is required.

e.      Financial statements, bank statements, written evidence of a financing commitment, or other evidence, satisfactory to LSS, each in their sole discretion, of the financial ability to close under its asset purchase agreement within the deadline described above.

f.        A signed asset purchase agreement in the form of an APA to be prepared by LSS (the “Form APA”), “red-lined” against the Form APA to show all modifications required by the submitting party.  Such asset purchase agreement shall be without contingency for financing, further due diligence, or “material adverse change,” and shall not contain a break-up fee or expense reimbursement.  All modifications must be acceptable to LSS, in consultation with Lighthouse Management Group, Inc., CRO for LSS, and to any secured party if any modifications would result in less than full payment of such party’s secured claims.  LSS will use its sole discretion and reasonable judgment in valuing such changes and the value of any non-cash consideration to determine the total value of the bid.  The asset purchase agreement must also include a list of unexpired leases and executory contracts to be assumed by LSS and assigned to the submitting party.  The bid must be irrevocable and on terms at least as favorable to LSS as those set forth in the Form APA.

g.      A deposit (“Deposit”) in the amount of [10]% of the purchase price in the form of a cashier’s check payable to the order of Lighthouse Management Group Inc., CRO for LSS, which will be returnable as set forth in Section I.

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