I have been approached by The Magee Corporation soliciting my Family’s interest in a 3 year oil and gas lease, with a Bonus of $150.00 per net mineral acre, Royalty 1/6th with an Option of a 2 year lease @ $150.00 per net mineral acre.
My Family has several 1,000+ acres in east Texas and another 140 acres in Green Country Oklahoma.
The current offering by The Magee Corporation appears significantly lower than what I researched. I would be inclined to offer The Magee Corporation the following:
3 year Term
Bonus $325/$350 per net mineral acre
Royalty 2/6th - 3/16
Lessor must agree in writing to any extensions beyond the 3 year term
I would appreciate any counsel provided, this land has been in my Family for over 100 years so it’s personal.
You probably won’t ever see a 2/6ths (1/3) royalty so that will be out of the question. As for the 2 year option,
ask for double the original bonus amount. Extensions can be a gamble. An excellent well in an offset might drive up the price. Of course a dry hole in an offset might condemn your section. Never hurts to ask for more. If they really want your acreage, they may say yes. If not, they will say no.
The $325/$350 bonus may be a little high for Wood County but the Royalty rate for Texas is 20%-22 1/2%-and 25%…I would counter with $250 bonus and as Buddy Cotten(Mineral Manager) says…NEGOTIATE
I feel as though Magee Corporation is a flipper and trying to make some big bucks off of your lease… I see no where that they have ever drilled any wells in Texas. Would you mind sharing the Section, Block and/or Abstract #.