Black Ridge Oil & Gas

Black Ridge Oil & Gas is a non-operating participant in the North Dakota Bakken and Three Forks play. As a non-operator, Black Ridge participates in Bakken and Three Forks wells on a proportionate basis according to its leasehold interest in each drilling unit that is drilled by its operating partners. For example, if Black Ridge controls leases on 128 acres in a 1280-acre drilling unit, Black Ridge would hold a 10% working interest in any well drilled in that unit and thereby proportionately share in both the costs and income generated by those wells (i.e., Black Ridge would contribute 10% of well costs and benefit from 10% of well income). Companies that hold a majority interest in a drilling unit are responsible for the actual drilling and operation of the wells – they are referred to as operators. One of the advantages of pursuing a non-operator model is that, by definition, Black Ridge takes a minority rather than majority interest in its wells. This strategy generates for Black Ridge a highly diversified portfolio of Bakken and Three Forks wells across the Williston Basin. The benefit of a diversified mineral interest portfolio is lower operational risk on a well by well basis. Another benefit of the non-operator model is that it allows Black Ridge to partner with some of the most experienced and efficient operators in North Dakota. Operators (whether small, privately owned businesses or publicly held companies with billion dollar + market caps), invest heavily in exploration, and drilling research and development. By taking a minority interest in a well, we leverage the Operator’s significant investment and deep capabilities associated with that particular well. Another advantage of pursuing a non-operator strategy is low overhead. Black Ridge does not bear the operating and overhead costs of its operating partners, making it a low-cost producer in the Bakken and Three Forks play.