Nestled in the northwesternmost corner of North Dakota, Divide County is a region shaped by agriculture, small-town community values, and—more recently—energy production. Thanks to the underlying Bakken Shale formation, many residents and absentee landowners have found themselves the recipients of royalty payments tied to oil production.
For those holding mineral rights in Divide County, the prospect of monthly royalty income can be financially meaningful. However, as the Bakken matures, questions about the future of oil royalties have become more pressing. Many royalty owners are at a crossroads: Should you hold on to your oil royalties in the hope of long-term income, or sell now and cash in?
Let’s take an in-depth look at what it means to own oil royalties in Divide County, what’s driving this crucial decision, and how to make the best choice for your financial future.
What Are Oil Royalties and How Do They Work?
When oil companies lease land for exploration and drilling, they typically offer the mineral rights owner a percentage of the revenue from any oil and gas extracted—these are called oil royalties. The standard royalty rate in North Dakota varies but typically ranges from 12.5% to 20% of the gross production value, depending on the lease agreement.
Royalties are calculated based on:
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Volume of production from your mineral acreage
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Current oil prices (which fluctuate daily)
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Deductions for transportation, processing, or marketing
The royalty owner does not pay for drilling or operational costs but is subject to market risks and the production lifecycle of each well. Payments are typically made monthly but can vary widely in amount.
Why Divide County Matters in the Bakken Oil Play
While neighboring counties like Williams and Mountrail have historically seen higher volumes of drilling, Divide County has remained an active—but more moderate—player in the Bakken Formation. Over the past decade, dozens of horizontal wells have been drilled here, particularly around communities like Crosby, Fortuna, and Noonan.
However, production in Divide County has followed a familiar pattern:
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Initial Booms in the early 2010s, with spikes in drilling permits and new well completions.
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Declines in New Drilling after the oil price crashes of 2015 and 2020.
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Flattening Production Curves, as older wells reach maturity and new drilling slows.
The geology in Divide County can be more variable than in central Bakken hotspots, which means fewer new well developments in recent years. This dynamic is directly affecting royalty owners, many of whom are seeing monthly checks shrink year over year.
The Case for Holding On to Your Royalties
For some royalty owners, holding on to their interest seems like the conservative choice. Here are the key reasons many choose to keep their royalties:
1. Hopes for Future Business Upside
Royalty ownership can feel like owning a lottery ticket—there’s always the chance that a new horizontal well might be drilled, or oil prices could rise significantly. If you’re in a sweet spot of undrilled acreage, new development could yield long-term revenue increases.
2. Legacy Value
Mineral rights often stay in families for generations, passed down through inheritance. Some view these rights as symbolic of family heritage or a lasting gift to the next generation. Selling them can feel like breaking that chain.
3. Simplicity if Checks Are Steady
If you’re still receiving meaningful monthly checks with little hassle or deduction drama, the idea of passive income can be hard to give up. For some, even modest recurring payments feel better than a one-time lump sum.
The Reality Check: Challenges of Holding On
The idea of long-term royalty income sounds appealing, but for many in Divide County, the numbers tell a different story.
1. Declining Production = Shrinking Checks
Most wells in the Bakken formation follow a steep production decline curve. Within just a few years, a well may produce only a fraction of its initial volume. Without new drilling, royalty income decreases predictably.
In Divide County, much of the low-hanging fruit has already been picked. With limited new development, some wells are already past their peak—meaning royalty checks will likely continue to shrink.
2. Market Volatility
Oil prices are incredibly volatile, influenced by:
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International conflict and OPEC+ decisions
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U.S. energy policy and regulatory shifts
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Recessions or global economic slowdowns
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Renewable energy adoption
Just since 2014, prices have swung from over $100/barrel to under $30/barrel and back again. When prices drop, so does your income—instantly.
3. Opaque Deductions and Fees
Many royalty owners are surprised to learn that post-production costs—such as transporting, processing, or marketing the oil—can eat significantly into their monthly payments. These fees are often buried in complex statements and can vary widely depending on the operator.
Some checks arrive with detailed deductions; others come with unexplained reductions that require legal or professional review. It’s not unusual for owners to spend hours trying to reconcile what they were paid vs. what they were owed.
4. Ownership Complications Information
Royalties may be tied up in undivided interests across family members or estate heirs, complicating inheritance or decision-making. Selling can simplify estate planning and avoid future legal complications or disputes.
The Growing Appeal of Selling Royalties
Given these uncertainties, more and more royalty owners in Divide County are choosing to sell. Here’s why it may be the more strategic move:
1. Guaranteed Income Today
Selling your oil royalties provides a lump-sum cash payout based on the value of your interests. Rather than waiting on fluctuating monthly payments that may continue declining, you convert future income into tangible capital now—when it’s worth more.
This is especially beneficial in times of strong oil prices, as the market value of your royalty is directly tied to commodity trends.
2. Protection Against Downturns
When you sell, the risk transfers to the buyer. Whether prices fall, wells dry up, or production halts, it’s no longer your financial concern.
Think of it as selling your house at the top of the market—capitalizing before values fall.
3. Use Funds Strategically
The proceeds from selling can be used in any number of productive ways:
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Paying off high-interest debt
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Investing in a diversified portfolio
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Purchasing real estate
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Starting or growing a business
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Creating an emergency fund or retirement cushion
Unlike royalty checks that may total a few hundred dollars a month, a lump-sum payment gives you control and flexibility.
4. Eliminate Legal & Tax Burdens
Owning mineral rights requires ongoing management:
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Filing taxes on royalty income
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Reviewing operator reports
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Navigating legal or title disputes
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Managing inheritance or estate planning
Selling simplifies your financial life—especially useful for out-of-state heirs or older owners looking to clean up their estate.
What Is Your Royalty Worth?
The value of your royalty interest depends on several factors:
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Location and acreage: Some parts of Divide County are more productive than others.
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Current production: Active, high-producing wells increase value.
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Remaining well life: Newer wells fetch higher payouts.
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Oil price environment: Higher prices = higher value.
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Operator reliability: Strong operators with consistent payments add to valuation.
Professional buyers will evaluate your royalty using decline curves, historic production, and nearby well data. Offers often reflect 3 to 5 years of projected income upfront—so even if your checks are $500/month, that could translate into a $20,000–$30,000 lump sum.
Consider a Partial Sale
If you’re still on the fence, consider selling just a portion of your royalties. This lets you:
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Take some money off the table
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Retain a piece for potential upside
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Test the waters of the selling process
It’s a flexible approach that reduces risk while keeping some long-term potential alive.
Timing the Market: Why Now Might Be the Best Window
Market cycles matter. Selling during a period of:
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High oil prices
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Strong buyer interest
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Relatively stable production
…can help you lock in a higher payout. Delaying too long, especially in regions like Divide County where drilling is slowing, can reduce your royalties’ attractiveness.
Remember: royalty buyers are forward-looking. They project income based on future production, not past performance. Waiting for checks to get smaller means you’re also shrinking the potential value of a sale.
Questions to Ask Yourself
Before deciding to sell or hold, ask:
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Am I seeing declining royalty checks?
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Do I understand the deductions and fees I’m being charged?
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Is there future drilling planned on my land?
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Could I put a lump-sum payment to better use?
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Would I benefit from estate simplification?
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Am I willing to ride out price crashes and production declines?
Your answers will guide your decision—but many find that selling aligns better with their financial goals and peace of mind.
Conclusion: A Decision Rooted in Strategy, Not Sentiment
Holding on to oil royalties in Divide County may seem like a safe, passive investment. But the reality many landowners are now facing is stark: production is declining, new drilling is sparse, and monthly checks are shrinking. The Bakken isn’t what it was a decade ago—and for Divide County, the best days of oil development may already be behind us.
While it’s tempting to wait for a turnaround, time isn’t always on your side. The longer you hold out, the more your royalties may be worth less—both to you and to potential buyers. In contrast, selling now lets you lock in top value before further decline sets in.
A one-time, lump-sum payment can provide freedom, clarity, and opportunity. You can eliminate the stress of volatile markets, avoid future legal headaches, and redirect your wealth into something more stable and productive—whether that’s investing, buying land, building your retirement, or simply enjoying peace of mind.
Royalty checks may feel like mailbox money, but what good are small, inconsistent payments when the land beneath them is producing less each year? In many cases, cashing out today turns a dwindling asset into a lasting advantage.
If you’re holding oil royalties in Divide County, ask yourself this:
Would you rather hope for future income—or take control of your financial future right now?
Because sometimes, the smartest move isn’t to hold out for more.
It’s to sell while there’s still something worth selling.