First lease offered Total Bonus $103 plus $250 per mineral acre bonus (did not sign yet), then five months later new lease offering $200 but removing the $250 per mineral acre bonus. Additionally, the name of a drilling company appeared along with the other original company stationary heading requesting a new lease for the original three years with two year option. Can anyone share any insight or suggest what to do think and or ?
Don’t waste one minute of your time with a disgusting offer like this! Those are 1800’s times offer! Ha Ha
You need to specific as to what state, county, section-township-range or abstract plus the royalty listed. Offers vary by location. It is very common to get competing offers from different brokers or even the same one. Personally, I would never take the two year option as too much can change in three years. Many offers start out low and increase as competition heats up. Many offers start at 1/8th or 3/16ths. I always ask what they are offering at 1/5th or 1/4. I would much rather have a higher royalty for the life of the wells than a higher bonus up front.
If you have never leased before, or it has been a while, it would be very wise to invest in a good oil and gas attorney to review the draft lease and make edits. The draft leases are rarely in the mineral owner’s favor and need some negotiation. The clauses in the lease are so much more important than the bonus offered.
Rates offered depend upon location and competition plus the intended fluid. Gas wells frequently get lower offers. I see some areas with $50 and 1/8th which is perfectly reasonable for gas wells in that location.
Deb, if I have deciphered it correctly, I believe that the original total bonus was $103 which would be at the rate of $250 per net mineral acre. The flat $200 is them upping their offer, almost doubling it, IF I am correct that they think you own less than 1/2 net mineral acre.
Thank you for your responses. Apologies for delay in explicating the details. Indeed it is a small, if not minuscule in ownership of mineral rights interests.
Harrison County in East Texas. 82.9 gross acres J Earp Survey. A-230 Mineral Ownership Interst .005% 0.4145 mineral acre 1/5 Royalty 3 year prime term with 2 year option Total bonus $200.00
The second contract REMOVED the $250 per net mineral bonus.
Deb, they removed the $250 per net mineral acre because their new offer to you was only slightly less than $500 per net mineral acre and leaving the $250 per mineral acre in the offer wouldn’t be right, it would be going backwards. $500 per net mineral acre would be $207.25 total for your 0.4145 net mineral acres so, a nice round $200 doesn’t sound so bad. All terms being the same? It would be a much improved offer. They might even be willing to go a little higher as someone is spending time working on leasing every small interest and it might be worth it to them to have just a little bit more completed. Usually I would just wait and let them bid against themselves but you could just tell them what you want, if you could figure out a fair value. Sorry I’m no help in valuation on Texas minerals.
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