What is a fair price for bonus money in the Austin Chalk, land has had production in past, but currently no production. Company is offering 500 per acre, does that seem correct these days?
Red,
In the new oil business, offers are only fair to the leasing company. To get what you think is fair depends on what you, as an educated owner, find the minerals to be worth to you. Get educated on the potential of your minerals in today's market. To accept offers from leasing companies is to choose the best of the worst set of offers without knowing the demand for your specific minerals. If you have small acreage, it doesn't make any difference what you do but if you have larger acreages, signing today's leases could rip hundreds of thousands of dollars from your heirs pockets. With operators taking 10 to 20 times the risk cost of drilling and completing unconventional wells, there is no longer any free lunch for the uneducated mineral owner.
As one of the most learned mineral owners on the forum says, "your next lease may be your last." better make it count.
I was curious as well.
We have property in Frio County 5 miles south of Pearsall. Family also has property in La Salle county just south of Cotulla.
I have heard family say "they want" $5k an acre however; I think that is a pipe dream. Marathon Oil is underwriting a 3D data shoot on our property as we speak. I have advised family to focus on the royalty percentage (20% - 25%) and less emphasis on the per acre amount you are being paid. If there are supporting wells which are huge producers within a few miles of your land, then I suspect it gives you more leverage to ask for more per acre and percentage royalty. I would rather have 25% royalty and $500 acre versus $3,000 an acre and 20% royalty from my limited reads on these forums. We got $4k and acre in Cotulla (I do not have the royalty percentages) however that is a hot area for drilling right now. A sharp oil and gas attorney will be able to negotiate the best deal for you. Best of luck.
Anyone have any input on Frio County Bonus numbers being currently offered ? Any input is greatly appreciated !