We leased some Leon County acreage to Surprise Valley Resources back in 2021 and 2023. The 2021 acreage leased for $350/acre and the 2023 acreage was for $800/acre. Surprise Valley recently contacted us wanting to lease some additional acreage and I’m curious to know what the going rate for Leon County acreage currently is. If anyone has any idea what the going rate is, I would appreciate your sharing it with me. Thanks, JN PS - the tracts they’re interested in are in the Booker A64, Porter A687, and Hargiss A413 Surveys
June of 2023 we leased to them for $750 p/acre for 3 years. They have an option to renew for two years at $750 p/acre.
T.R. Thurman Survey A-614. Buffalo area, but in Freestone County.
Comstock (via Engelmann) Dec 2024 $750 3/2 22.5% A.W. Cooke They wouldn’t budge from these numbers, sounds like maybe Jneves2629’s tracts are more interesting to them.
Thank you. SVR hasn’t come back with their bonus figure yet, but now I have an idea what to expect
Thank you. I’m still waiting on their bonus offer, but this gives me an idea of what to expect
Glad to help. I am not going to mention names, but the guy I deal with at SCR is very friendly, and responds to questions. Since I live 1000 miles away, I have no clue of what is going on, except through communication with him. BTW, I don’t think it makes a difference, but we own mineral rights only, we do not own the land. We have 47.5 acres near Buffalo, in Freestone County, TX. The survey is T.R. Thurman Abstract 614.
Please make sure that you have a cost free royalty clause in your leases. The transportation cost they try to charge is “out of sight”.
Remember that bonus amounts are tied to royalty percentages. I prefer a higher royalty as it usually pays out significantly more than the bonus over time. Most folks in Texas want a 1/4th royalty and no post production charges. Always wise to get an oil and gas attorney to look over a draft lease as they are rarely in the mineral owner’s favor and need significant edits.
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Regarding “cost free royalty clause” the following is what SVR put in the draft addendum to the lease form…
“Lessor’s royalty shall be calculated free and clear of costs and expenses for exploration, drilling, development and production, including dehydration, storage, compression, separation by mechanical means and product stabilization incurred by Lessee before the point of custody transfer and sale by Lessee. Lessor’s royalty shall bear its proportionate share of ad valorem taxes and production, severance or other excise taxes and the actual cost incurred by Lessee under an arm’s length contract, negotiated in good faith, for the sale of oil or gas produced hereunder, to transport, compress, process, stabilize, gather or treat such production. The net price received by Lessee for its share of oil or gas produced under the terms of this lease shall be the price used to compute Lessor’s royalty share of oil or gas hereunder.”
Is this standard language? Should it be changed to eliminate any costly deductions? Will SVR agree to change it?
Any suggestions will be greatly appreciated. JN
Good points. We tried. My impression is that it seems to be really hard to get 25% w/ no post-production charges unless you’re lucky enough to have a chunk that the lessee really needs. Comstock wasn’t willing to do a higher percentage in exchange for lower bonus. I think they see our area as something they might want to explore in a few years. I was willing to gamble on waiting, other owners, not so much & buying them out looked like too big a gamble.
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Questions: Where is the “point of sale” in this?
Thanks for responding. To me, lease really doesn’t specify where the point of SALE is. It essentially just says… “The royalties to be paid by Lessee are: a) on oil and other liquid hydrocarbons saved at the well, same to be delivered at the wells…” b) on gas, including casinghead and all gaseous substances, produced from said land and sold by Lessee, …” “c) on gas, including casinghead and all gaseous substances produced from said land and used by Lessee and not benefiting Lessor, the market value at the mouth of the well…” I’m not sure if this means anything, relative to “point of sale” but it looks like the royalties are paid based on oil “delivered at the wells” and gas “at the mouth of the well.”
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I was wondering same. Maybe “point of sale” is at the wellhead?