We have recently gotten a lease offer in Lea County, NM, Township 20 South, Range 32 East, for $15,000 per net mineral acre for a 5-year term on a 25-acre tract, all depths, with a 1/4 bonus. Do any of you have a sense of whether that is a reasonable offer? Thanks.
You didn’t post the Section of your lease.
The interest is in Section 27. Thanks.
There is a lot of drilling going on in that area, As long as you are dealing with a reputable Company, I think it is a good offer.
Thank you! Very nice to get the feedback. Much appreciated - David
It would be very wise to get a reputable oil and gas attorney to review any draft lease. The clauses in the lease are much more important than the bonus. Most drafts are in the operator’s favor and need some negotiation to get more in balance with the mineral owner’s needs.
I may not be creative enough, but I can’t think of any non-absurd lease clause for an oil well that matters as much as $375k in bonus. Not that Martha isn’t right, should call an attorney mostly since its y’know…$375k of bonus. In fact, the first thing I would ask the attorney to do is to ask for more bonus. Then go from there.
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You guys are both experts, but one good thought to keep in mind before responding is that you need to check that your “unleased” mineral interest is not already in production (i.e., you may be an unleased mineral owner on a paid-out well and entitled to 100% of your share of production less actual costs). Big incentive for operator to convince you quickly to sign a lease for a generous bonus and royalty of 25% … ummm… 75% less that you would get otherwise. But yeah, you won’t get the $375K up front.
Reasonable shout, but there are no wells in or producing from any part of Sec 27. Just a lonely bit out in the middle of potash in NM.
Everybody gives oil companies way too much credit for being devious. When things are great, they make so much money that there really isn’t much point. When things are bad, they are so screwed that there really isn’t much point. That is my experience.
At Company X we had the full list of $YYYM worth of suspended revenues and nobody was advocating in any way to go track down and buy those folks out for pennies on the dollar. Nobody. Well, I mean nobody but me. 
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