We are receiving lease offers on a new well in Stephens County, OK. Some of the offers read a certain Bonus amount with a fraction royalty for a term of 3 years. Ex. $2000.00 per acre with 1/8th royalty for 3 years" Other offers read a Bonus amount with a percentage. Ex. $300.00 per acre delivering an 81.25% net revenue (no term). Could someone explain the difference to me? Thanks for your help.
Actually both. A 1/8th royalty is a 12.5% fraction. A 3/16th royalty is a 18.75% fraction. (they keep 81.25% revenue.). They are a bit complicated to read. In Stephens, I always ask for their 1/5th option and 1/4 option. Also, if you have never leased before, it would be very wise to get a good oil and gas attorney to review any draft lease. The draft leases are usually not in the mineral owner’s favor and need some significant edits. Never sign over a lease without getting paid that day. I do not agree to a draft payment. They can slow down payments by months.
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