We have received an offer to lease minerals in Fannin County. The offer was for 1/8th royalty, $150 per acre bonus, 5 year primary term with a 2 year option. Nothing about Pugh clause, depth clause, etc. Is this the best we can hope for?
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This would seem to be a very minor proposal. Research the property on the TX RRC website for activity. Patience and research generally provides a better financial decision.
Welcome to the forum.
Depending upon the geology, most folks in TX would prefer a 20-25% lease for three years with no option. Some areas may not warrant that high. Most clauses in the lease are negotiable.
I have owned unleased minerals in Fannin for about 15 years, and as the map shows, there is no production there, the last lease (according to Drilling Info) was recorded about 2 years ago. It is currently an oil and gas wasteland. I would ask for 20%, but expect to get a royalty rate of 1/6 or 3/16. Unfortunately, this is not 20-25% land.
Fannin County is an unproven area with no significant oil or gas history. So difficult to negotiate much. But with current technology this could change. Our neighbors in northern Fannin County have received a somewhat similar offer to what you have mentioned. And were told a company is leasing thousands of acres. But have yet to receive funds from a signed agreement. Perhaps over the next few months there will be more information as it seems to be preliminary at this point.