I just received agreement to lease 175 acres in Dimmit for $1000.00 bonus, 3 years and 20% royalty. My place is on Brown Rd west of Asherton and there is production all around me. Seems reasonable based on leases currently being offered in the area. Any thoughts or advice?
Ed, I personally would not lease on a 20% royalty. It needs to be 25% and it needs to be cost free, not cost free but...Now the question I would seek is "how bad do they need you and what percent of the 175 acre do you own? Also who is the operator and are they really drilling or are they flippers?
Ed Cuellar, please explain, is the $1,000.00 bonus per acre or lump sum? If lump sum, that is definitely too low. Also, the going rate for royalty in Dimmit County is 25%
I own 25% of the minerals and it is $1000.00 per acre. Chesapeake is doing most of the drilling operations here,so I imagine the land man will be working with them.
New member here. Want to thank all those who have posted info, very helpful. Ed, can you give us a survey name, abstract number etc. I believe things are moving a bit in a very “low key” way. I was contacted to lease mineral rights in two different locations during 2016. Offers were $500 bonus, $250 2 yr opt, 20% R. We declined the offers at that time. Then I received a call (last week) and have again started the negotiation process. Their offer was $350 bonus, $250 2 yr opt, 22 1/2% R. We again declined. Not interested in negotiating using those numbers etc as a starting point. Again, newbie to this forum, thanks in advance for any advice numbers or help.
Geo Shea and Ed - in addition to Geo’s request to Ed for survey name, abstract #, etc. could you both give a general description of the location of your property? E.G. 10 miles NE of Carrizo Springs. That’ll help the rest of us know if you’re in our “neighborhood.”
Geo - What company(s) are making the offers? It’s ok to name names as long as you haven’t agreed to keep it confidential.
Ed - that bonus sounds very low. I just leased minerals in Fayette Co TX for $850/ac for 3 year lease. That’s the other end of the Eagle Ford shale production close to Schulenberg TX - where it crosses I-10 half way between Houston and San Antonio. Up there they are chasing the Austin Chalk - again.
I would find out how much of the tract they have leased and when they intend to drill and is it permitted yet? Also how many wells in the vicinity have they drilled? If the answer to that is none, then they might be flippers...
Correction to my post 20 min ago. I hadn’t seen Ed’s earlier posts, then got Ed and Geo mixed up.
Geo, your bonus looks quite low. I would guess that it’s a company speculating on the lease, and looking to flip it to somebody else at a future date. Most of us on the forum agree, that we would rather not lease to speculator companies, but lease only to operating company - one which drills and operates in the area.
Ed - I now see generally where your property is. Thank you. The bonus you are being offered seems respectable given the current state of the industry, commodity prices, etc. But as others have said, bonus should be 25%.
Good luck.
My property is about 6 miles SW of Asherton. It is called Hidden Valley, Survey 47, Abstract 726. I do not know how soon they intent to drill but there is production in all the ranches adjacent to mine by Cheasapeake and Lone Star Resources. Thanks for the advise and hope this helps.
Ed, those horizontal wells nearby are generating a lot of oil and a lot of gas.
I would think you could get $1,500 per acre on bonus and 25% cost free royalty I would be very careful with the royalty language as it relates to the gas as I had several deals with the big boy and they found a way to keep the gas and pay me nothing...
Thanks for that heads up William. If you took their gas without paying for it they would come down on you like a ton of bricks. All this info is what makes Forum's like this one so valuable.
G C Gill, Sanchez and Maverick (recent name change and goal change). In the past we have leased to Chesapeake, Farmland, Newfield, Sage and Union Pacific. Obviously different times and different mineral tracts. So not entirely new to the process. Everyone would like to have production from a lease. But, take Sanchez for example; they can drill, but, according to their stats, they have 335,000ac leased in the Eagle Ford play. (I got those figures from a Sanchez investor report...got the link off this forum). The number of actual wells producing/drilled/operating was small, in my opinion, vs prospective well sites available. So, are they just tying up lease ac? Granted there are some companies that try to lease up acreage and sell the "bundle" to production based outfits, for a fat profit of course. Anyway, I'm getting off tract. Sorry. Location request A-637 and A-1058. Survey names Newell and Votaw. It's late and I don't have the Block/Tract numbers in front of me. Hope this helps answer your question.
G C Gill, The Sanchez link I read was from your post of Nov 15,2016. Thanks.
http://investor.sanchezenergycorp.com/phoenix.zhtml?c=248475&p=irol-presentations
Does anyone know??
What is the status of Gambit Oil's former leases? ... are they still held by the bankruptcy courts? My leases have expired with this now defunct co.
Interested in rcvg new leases. And are there any VERTICAL wells being drilled into the Buda? I want to specify 'vertical only' - is that possible and recvd well by prospective Lessors...Any replies, much appreciated. Thank you :)
My brothers and I received an offer from Sanchez Energy for a small portion of T. & N.O.R.R. Survey No. 21, Abstract No. 779, as follows:
OPTION ONE:
Bonus: $350/acre
Primary Term: 3 years
Extension Bonus: $250/acre
Extension Term: 2 years
Royalty: 22.5%
or
OPTION TWO:
Bonus: $250/acre
Primary Term: 3 years
Extension Bonus: $200/acre
Extension Term: 2 years
Royalty: 25%
As part of the same request, we received a ratification for a lease on Farm Lots 39, 40, 41, 42, 55, 56, 57 and 58 in Section 169 of the Cross S Ranch Subdivision out of the Francisco Pereyra Survey, A-3. That lease provided for a $500 bonus and 25% cost-free royalty, with no extension term.
When I asked the land man why we weren't getting the same deal on our lease as the lease we were asked to ratify, he said it was because the minerals are in different parts of the county.
Should I insist on the same deal or something else entirely?
Thanks for any help.
Is it possible to specify for VERTICAL drilling only on my leased properties - negotiations...and anything New re: Gambit Leases being released by the courts?... thanks!
I have a San Miguel well in Valley Wells I would like to sell. If anyone is interested please contact me for further information.
SOLAR farm - i received a letter of inquiry today noting that i owned minerals in Dimmit County and wanting to discuss possibly using the surface for a solar farm. Meanwhile my wife’s family is being asked to lease their land in Goliad County for a solar farm.
Question 1 - does the mineral owner who does not own any surface have any rights to lease?
Question 2 - how do solar farms coexist with mineral production?
Mr. Archer,
The solar developer has approached you because the solar company could be liable for interfering with your right, as a mineral owner, to produce your minerals. The mineral estate is the “dominant estate” (over the surface estate) with rights of ingress and egress and use of the surface to the extent reasonably necessary to develop the minerals. While the mineral owner must make reasonable accommodations for existing surface uses, such surface uses are not protected if they prevent economical mineral development. Thus, the solar company would like to protect their investment in a solar farm on the surface by reaching an agreement with the mineral owner to limit mineral development activities to certain predetermined areas. The agreement would limit your rights and protect the solar company from potential liability for interfering with economic development of the minerals in the future.
So, as to your first question, you do have certain valuable rights that the solar company would like you to limit via a written agreement. As to your second question, mineral production and solar development can theoretically coexist if both parties agree to limit their respective operations to designated parts of the property. However, there is no guarantee that the predetermined areas allocated to mineral development will be sufficient to allow for full development of the minerals in the future. Mineral owners should be cautious in signing any agreements.
Patrick Flueckiger
Texas Land and Mineral Law
Disclaimer: This post is for informational purposes only and does not constitute legal advice, nor does it establish an attorney client relationship.
Thank you Mr. Flueckiger.
My interest is rather small from 8% in a best case on down
i hope many of the others dont sign.