We have received an offer of $50 per with a 1/8% Royalty from Petro Hunt. Our property is surrounded by the public auction coming up in Dec. A long leasing contract that we are sure is stacked in their favor. How do we get advice on whether this is fair? We are willing to pay for advice. Don’t know any landsman or Montana attorneys. Advice please.
John, you started at the right place. My brothers and I received the same offer from Petro-Hunt and we were put under a time constraint but did manage to negotiate for $350/acre and 1/6 royalty. There are some very knowledgeable people here that can help give you the advice you need. I sent a friend request so that we can chat more outside of the forum if you care to and I can tell you some of what I learned.
John:
You didn't state the area (Township/Range/Section) in Dawson County where your minerals are located. This information is vital in deciding whether or not the bonus amount is fair. In the September auction, bonuses ranged from $11 - $1555/acre so your location is an important factor. The 1/8% royalty sounds low as I would negotiate for 20% with a 3 year maximum lease. I am not familiar with the Dawson County area as my minerals are located in Roosevelt and Sheridan counties. You might want to do some research and find the nearest well or wells and check out the production figure for the well(s). Do some homework before making your final decision and read up on former postings regarding leasing. Be sure to read the "Mineral Help" at the top and also there is a site on lease help posted at the "Million Dollar Way" website. These companies or their representatives have a ceiling price they are willing to pay and your job is to find out what the price and terms are.
Charles, T27 N, R48 E, S09. Roosevelt County, What are the bonus ranges, and who are the active leasing companies in that area. (if you know any of this off the top of your head, I don’t expect you to do my leg work)
Andrew:
It appears the Brigham Oil and Gas is temp. spacing multiple areas which are in the vicinity of your minerals but these areas look to be to the East of your area. Also, Brigham paid $2500/acre at the State Auction for a mineral lease in an area: T27N;R59E;Section 36. I would contact Brigham for starters to see if they are interested. In regards to bonuses, I have no idea what the amount would be for this particular area but I would guess $500 - 800/acre. I leased some of my minerals in Roosevelt County (back in 2008) to Empire Oil Company, a lease broker. I was able to negotiate a good lease with them and they paid on time with no problems. Good luck on your leasing.
Andrew Babcock said:
Charles, T27 N, R48 E, S09. Roosevelt County, What are the bonus ranges, and who are the active leasing companies in that area. (if you know any of this off the top of your head, I don't expect you to do my leg work)
We are in Dawson county. We are rejecting the offer of $50 per with a 1/8th royalty. We have waited for well over 70 years and with the idea of having the property locked up for 5 years considering all the changes happening in the adjoining counties we can wait longer. The bonus money is not that important to us. But the royalty offer is a different story. We need to think about future family generations.
Glen Gierke said:
John, you started at the right place. My brothers and I received the same offer from Petro-Hunt and we were put under a time constraint but did manage to negotiate for $350/acre and 1/6 royalty. There are some very knowledgeable people here that can help give you the advice you need. I sent a friend request so that we can chat more outside of the forum if you care to and I can tell you some of what I learned.
John Johnson said:
We are in Dawson county. We are rejecting the offer of $50 per with a 1/8th royalty. We have waited for well over 70 years and with the idea of having the property locked up for 5 years considering all the changes happening in the adjoining counties we can wait longer. The bonus money is not that important to us. But the royalty offer is a different story. We need to think about future family generations.
Glen Gierke said:John, you started at the right place. My brothers and I received the same offer from Petro-Hunt and we were put under a time constraint but did manage to negotiate for $350/acre and 1/6 royalty. There are some very knowledgeable people here that can help give you the advice you need. I sent a friend request so that we can chat more outside of the forum if you care to and I can tell you some of what I learned.
i have just received an offer of a lease for our 160 mineral acres in Dawson County. Our offer is for $70 per net mineral acre bonus, and 16% royalty. From what I have read in other places, it seems this is low. Should we try to negotiate higher terms?
John Johnson said:
We are in Dawson county. We are rejecting the offer of $50 per with a 1/8th royalty. We have waited for well over 70 years and with the idea of having the property locked up for 5 years considering all the changes happening in the adjoining counties we can wait longer. The bonus money is not that important to us. But the royalty offer is a different story. We need to think about future family generations.
Glen Gierke said:John, you started at the right place. My brothers and I received the same offer from Petro-Hunt and we were put under a time constraint but did manage to negotiate for $350/acre and 1/6 royalty. There are some very knowledgeable people here that can help give you the advice you need. I sent a friend request so that we can chat more outside of the forum if you care to and I can tell you some of what I learned.
Hello Glen, is your property in Dawson County? The offer we received for a leas on our 160 acres in Dawson County seems low. it is for $70 per mineral acre bonus, and 16% royalty for 5 year lease. Do you have any advice on how I can find out what is the going rate for Dawson County?
Glen Gierke said:
John, you started at the right place. My brothers and I received the same offer from Petro-Hunt and we were put under a time constraint but did manage to negotiate for $350/acre and 1/6 royalty. There are some very knowledgeable people here that can help give you the advice you need. I sent a friend request so that we can chat more outside of the forum if you care to and I can tell you some of what I learned.
Hi Katy, we are in Richland county just above Dawson county. I wish I could give you some good advice on how to find the answers to your questions but I don't really know. All I can say is to keep asking on these forums and hopefully someone can come up with some suggestions. Charles Mallory is very knowledgeable and might have an idea where to look for this info. I would like to be able to track some of activities going on in our area also just to keep updated. Best of luck to you!
Glen
Katy:
I too believe the offer you recieved was low and with undesirable terms. To elaborate, the bonus amount sounds low but how close to proven production is your mineral area. This factor is huge in seeing increased bonus amounts. I know the bonus is an important part of the lease negotiation but the most important areas in that of the % royalty and the length of the lease. I would insist on a 20% royalty and limit the lease to a 3 year with no extension clause. Also, you need to add a "pugh clause" in your lease. If you are not familiar with a pugh clause, you can google it and read what it means and the benefits of this clause. If you want to get an idea on the $$ amounts for Dawson County (per acre), you can always google "Montana Mineral Management" and review the past State Auction sales for Dawson County. Keep in mind that these are 5 year leases and will be a much higher bonus/acre amount than you will recieve for various reasons. Good luck in your negotiations.
Katy, it is also a good to have someone look at your lease offers to make sure your best interests are represented. I used Buddy Cotten and feel he is extremely good at what he does and the small cost will save you big bucks in the end. Lease offers will lean towards the oil companies and you need to make sure it gets done in a way that you don't end up with hidden costs that would take away from what you deserve.
Hi Glen,
What is the cost and how does one get a hold of him? Is he a landman?
Glen Gierke said:
Katy, it is also a good to have someone look at your lease offers to make sure your best interests are represented. I used Buddy Cotten and feel he is extremely good at what he does and the small cost will save you big bucks in the end. Lease offers will lean towards the oil companies and you need to make sure it gets done in a way that you don't end up with hidden costs that would take away from what you deserve.
He is $60/hour and well worth it. Here is his website so you can look it over. If you click on services, it will show oil and gas lease forms. Get in touch with him, he's very easy to talk to and represents our best interests.
Feel free to tell him I sent ya! ;)
katy sauser said:
Hi Glen,
What is the cost and how does one get a hold of him? Is he a landman?
Glen Gierke said:Katy, it is also a good to have someone look at your lease offers to make sure your best interests are represented. I used Buddy Cotten and feel he is extremely good at what he does and the small cost will save you big bucks in the end. Lease offers will lean towards the oil companies and you need to make sure it gets done in a way that you don't end up with hidden costs that would take away from what you deserve.
Thanks so much! I will contact Mr. Cotten.
Glen Gierke said:
He is $60/hour and well worth it. Here is his website so you can look it over. If you click on services, it will show oil and gas lease forms. Get in touch with him, he's very easy to talk to and represents our best interests.
I think 50 and 1/8 is to low. Never take the first offer, and go with a three year. After all if they can't get a well dug in 3 they won't get it done in 5.
Thanks Kim,
I have managed to get the offer raised to $100 per mineral bonus, and 1/6 royalty. I think we are going to go with that, but If I hear back from Buddy Cotton, I will ask him to take a look at the lease first. We had an attorney in Montana look at it, but I don't know how thoroughly he checked it over. He said it is a 'standard' lease with nothing odd about it.
Katy, I would wait for Buddy's answer for sure. He found many entries in our lease offer that needed modification. He is an expert in this area and knows the tricks of the trade that the oil companies throw at you. Small variations in the wording can cost you much more than you can imagine.
You mentioned a public auction. what are they auctioning? unclaimed mineral rights?