Greetings,
My family and I have mineral rights in 29N 55R whose previous year lease will expire in October. A renewal offer for 250/acre and 16% royalty was offered.
This seems low, so we are looking for advice from other owners in the area. I like that this is only a three year lease, but the bonus and royalty amounts seem low.
Also has activity picked up in this area?
Thank-you!
Joel
Joel, I was offered 150.00 & 18% in 28n 51e & declined. So, I believe the royalty you have been offered is very low. 18% is absolute minimum. 20% is reasonable. Based on your offer, I wonder if they are just lowballing you or if they think they can flip it for a profit. Tom
Joel:
Statoil has a well in Sections 15 & 10. Fair production figures with outstanding early production. You failed to state your section(s) but from what I can see, the offer is way low. Keep in mind, there are multiple zones that have yet to be developed using todays advanced drilling technology. You need to let this lease expire and play hardball as you monitor other wells being drilled in the area. Your negotiating power is much greater when your lease is expired. When you do lease, consider a pugh clause in order to protect lower formations such as the Red River. I have minerals in T30N;R58 and R59 area. Mine expire in April and June of 2014 so I will most likely allow all to expire and deal from there. This Eastern MT area is virtually undeveloped and it will take only one or two great wells to make the negotiations interesting.
Thanks Tom/Charles. We will let these expire and see what happens. The section is 29, 31, and 32.
Good advice on the pugh clause.
charles s mallory said:
Joel:
Statoil has a well in Sections 15 & 10. Fair production figures with outstanding early production. You failed to state your section(s) but from what I can see, the offer is way low. Keep in mind, there are multiple zones that have yet to be developed using todays advanced drilling technology. You need to let this lease expire and play hardball as you monitor other wells being drilled in the area. Your negotiating power is much greater when your lease is expired. When you do lease, consider a pugh clause in order to protect lower formations such as the Red River. I have minerals in T30N;R58 and R59 area. Mine expire in April and June of 2014 so I will most likely allow all to expire and deal from there. This Eastern MT area is virtually undeveloped and it will take only one or two great wells to make the negotiations interesting.