I received a call yesterday from Carl Seifert with R. D. Williams representing XTO with a lease proposal (due to arrive today) for Love County, Oklahoma
Section 34 Township 6S Range 1W
Our branch of the family owns 1/12th undivided interest in 190 acres.
Initial proposal: $500 per acre, 18.75% Royalty, 2 year extension that would repeat the bonus lease consideration of $500 per acre.
Of the above net acreage of 15.83334, I own 1/15th, making my net acreage 1.055556 net. I have Power of Attorney for 2 siblings with equal ownership as myself. Another branch of the family that I can contact own the same as we do. The landman claims they have been leasing in the area for 2 years now, and we are the last remaining owners to be contacted. They could not locate any family members except me.
How much negotiating power do I have? I always aim, in Texas, for 25% royalty. Is there any activity going on in this area of Love County, OK? Is there a shale formation here? Drilling activity? Production records?
Any information that can be provided would be greatly appreciated. I've negotiated many leases in Texas, but usually in Oklahoma I have virtually no negotiating power as our interests are so small.
Love County has become a hot area. I went to the court house last week and could hardly move on count of the landmen in there. I live in texas also but I would hold out for a 1/5 or 1/4 and no extension and if I gave a extension I would ask for the Bonus for the next 2 yrs to be $750.00 a a/c or the current Mkt. rate which every is higher I got that for my lease in Cado ok. and only have 10 A/C under 160. The woodford shale is in Love county. xto is drilling not to far from you now.
I went ahead and signed the lease: 18.75% Royalty (they would not budge and I tried for 2.5 months), $850. per acre, 3 year primary term, no extension. It was their lease, which did state that the Lessor would bear no costs of transporting, processing, etc...with an exception. I'm sure it's not the best lease but being a small mineral owner gives little room for making demands, even if they are reasonable! Love County, Section 34, Township 6 South, Range 1 West.
"small owners" can have plenty of power.......you have to team up with surrounding owners and negotiate. If you know the fair market value with a little research (i.e. a petroleum engineering firm), they will understand that "you know" what you have! A firm might represent you and only take a small percentage when the agreement is made and you start making money. This is what I am doing with my acreage.
2.5 months is not a long time to hold out for what you may ultimately end up getting a hugely different outcome....they won't "budge" unless you get backup and someone who knows the fair market value!
They will eventually reach a better deal if you have sections of owners in your area behind you!
Ron Hicks said:
I went ahead and signed the lease: 18.75% Royalty (they would not budge and I tried for 2.5 months), $850. per acre, 3 year primary term, no extension. It was their lease, which did state that the Lessor would bear no costs of transporting, processing, etc...with an exception. I'm sure it's not the best lease but being a small mineral owner gives little room for making demands, even if they are reasonable! Love County, Section 34, Township 6 South, Range 1 West.