Hey everyone. Please forgive my brevity and directness. I got an offer from Elite Title and Land to lease for $300 an acre, 3 year term plus 2 year option. 1/5th royalty rate. Is this a good price? Thanks.
Hi Samxen,
We received the exact same offer from Elite for Section 18 t13s, r38e Lea county, NM. We ignored it and a month later received a 2nd offer for 450PNMA, 1/4 royalty, and 3 year + 2 year extension. We are in negotiations and are holding out for a better deal. I wouldn’t accept the initial offer. It pays to negotiate. Good luck.
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Thank you, Rick5. Hugely helpful!! I need a education. 
Where you are located determines the interest level. I have several Lea county locations with offers ranging from 300 to 3000 with 1/4 royalty no deduct clauses And depth. I suggest that you find out what is happening in your area. You will have to provide the legal description for your minerals for the folk who know what is really going on to help you. I’m not qualified to recommend!
Thank you, Archie. My minerals offer is for Township 13 South, Range 38 N.M.P.:M. Tract 1: all of the N/2NW/4, SW/4NW/4 of Section 19.
I am just beginning my research. Any link to reference material would be greatly appreciated.
Thank you!
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FYI. I am close to finalizing new Lea Co. leases on S1 T25S R35E, S17 T25S R35E and S10 T25S R35E with bonus $ average around 4K / mineral acre. We will use my old leases that have a 3 year, 1/4 royalty with clear no-deduct statements, depth provisions, etc. This seems to be the current valuation established from several offers. I plan to go with the group I have dealt with in the past since I have reasonable confidence they will not disappear. We all know a deal is not done until the cashiers check is in your hot little hand.
Archie, Are you willing to share the specific verbiage you use in your leases? I’m particularly interested in the “no deduct clauses” and depth limitation language. We also have holdings in that area. Thanks, Jim
I will be happy to share, after I have the $ in my hand. Send me your email and I will pdf a copy of what I use.
Afternoon,
Below are some terms we use in our standard O&G contracts. We typically request the use of our standard lease document which includes all of our preferred terms and language. This puts the burden of making changes on the operator/producer. Regardless of what is offered, we always request 1/4 royalty, no deductions, specific Pugh clauses and no extension. We often concede on a 2 yr extension but insist on a mutually agreed to new bonus offer prior to start of the extension. Always recommend any lease/language be reviewed by Counsel but below is some of our standard language:
No Deductions: Lessee shall not deduct from the royalty paid hereunder any charge for compressing, treating, purifying, or dehydrating (whether on or off the lease premises) or transportation on or off the lease premises, or for the separation, stabilization, manufacturing or measuring of oil, gas or other hydrocarbons covered by this Lease. It is the intent hereof that Lessor’s royalty on oil and gas produced hereunder shall be free of all costs incurred with respect thereto by Lessee or any third party beyond the wellhead connection.
Depth Limitation: -Upon the conclusion of Lessee’s continuous development operations, if any, this lease will terminate as to all lands not within the proration unit of a well producing or capable of producing oil and/or gas in paying quantities and as to all depths below 100 feet below the stratigraphic equivalent of the deepest producing depth, and from the surface down to 100 feet above the stratigraphic equivalent of the top of the shallowest producing formation, in each proration unit.
Good luck!
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Bp11 clearly states and provides clear unambiguous verbiage we must all include in our leases
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Thank you all for your help. Please keep the advice coming…
Archie, I seem to be unable to PM you my email address even though I am at the “Basic” trust level.
BP11’s language was very helpful. If there is anything you are willing to share on the forum, I would surely appreciate it. Jim
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I am disappointed but must report that I am having to withdraw from recent lease discussions regarding sec 1, 10 and 17. Reason is that the offering company will not make committal for a date for closure which usually means they are just trying to arrange a deal for flipping a lease to someone else. I have no particular timeline, but I do insist on having a target date for closure as a part of any agreement.
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