My 2 siblings and myself received a lease offer on 240 gross mineral acres. 3yr primary term with a 2yr option to extend. Bonus is $750 per net mineral acre (paid-up at beginning of lease within 45 days) and 20% royalty.
I’d appreciate any feedback or help as to the activity in TOWNSHIP-24S RANGE-36E.
Also to add, the landman came to my home to deliver the lease offer and indicated they are very interested. Is this normal for a landman to visit your home? We’re uncertain as to if this is a lowball offer.
The first off is always their lowest offer. The fact that they showed up at your door says a lot. I have never had a valid offer go down if I tell them my lawyers are busy and they have to look at the lease, and mine is still waiting in the queue.
Things change pretty rapidly in 24s36e. As you move West to East you start to go from the Delaware Basin where horizontals are good, to the Central Basin Platform, where that’s much less of an option. So a lot of the feedback would be contingent on knowing the section.
If you have 240 acres to lease, it makes some sense that landman came to your home. That’s a big deal. If you have 1/128th of 240 acres to lease, then maybe not.
Let me guess. Matador Resources (MRC). I received a similar offer, but 80 gross acres. Same terms. One of my issues is the Landman didn’t tell me how many net acres I own…He told me to sign the lease and send him an image, once they get that they would tell me what I owned and pay me…My interest is in Sec 25, Township 25 South, Range 36 East.
I will say the same day, I received an offer from the same group (same Landman) for $2,500 per acre with a 25% royalty. That one is in Section 21, T-25-S, R-36-E. Not sure why that sections so much better…
By “paid-up at beginning of lease within 45 days” are you saying you are considering handing over a signed lease without simultaneously exchanging it for a check backed by immediately available funds? Search this site for “bank draft” and “order for payment”
I am not a fan of a two year extension and will not agree to it. I think it is very unwise to hand over a lease without getting paid. Many land men use the “gross” acreage as a teaser. Most folks do not own that much and to me, it indicates, that they may not have done the title work yet. Very expensive to do that. The gross acreage often goes back to an original land patent grant, so easy to look up. The title work is much more time consuming. 45 days is actually nine weeks! Do you want to wait over two months to get paid? Gives them plenty of time to flip the lease and you may or may not get paid-can be challenging if the lease is filed…
If I agree to a lease, then I have my attorney or accountant hold the original until I am paid. I send a scan a copy of the signed lease with COPY DO NOT FILE in big black marker over every page and especially over the signature line. It shows good faith that I have signed the lease, but they do not get the original until they pay.
And I always ask for a higher royalty and a higher bonus. Would be very wise to get an attorney to review all the lease clauses as they are rarely in the mineral owner’s favor.
We’ve received an offer to lease our mineral rights in section 10E of T25S-R36E containing 320 acres for $1,000.00 per acre. We own 7 net mineral acres between three of us. I have very little knowledge about how this works or of this is a good offer or not. And advice would be appreciated!
An offer to lease comes with a royalty such as 20%, 25%, etc, so the 1000.00 is not helpful without the royalty amount. The acreage amount is often a gross acreage and not your net acreage unless you have had several generations of one heir. Agents often use the gross since they may not have done their title work yet to know the net. Title searches are very expensive. Bonus offers are private, so cannot tell if that is market rate or not. Generally, first offers are low to see if someone will bite.
I will not sign a letter of intent. I ask for a draft lease and then get a good oil and gas attorney to review it. They are rarely in a mineral owner’s favor and need edits.
Matador has permits for horizontal wells just to the south of you in 15/22, so they may be the eventual operator. Quite a few different agents have been leasing that section and I do see 25% rates.
If you are brand new, I would suggest reading the mineral help tab above.