I received an offer from Marathon to lease my 22 NMA in Sec 8, Township 23S, Range 28E.
They are offering:
What else can I provide you experts here on the site to help determine:
I will consult an attorney to go over the lease after I get a better understanding on the topic at hand.
Thanks in advance.
waayyyyy low.
Like most 1st off the cuff offers.
Thank you @fjonesiv for that input.
Good to know.
This is a booming area. I have 33 newer producing wells within this area.
Thank you for the feedback @nursetheresa3940
Most savvy mineral owners would go for the higher royalty and lower bonus. The bonus is a drop in the bucket compared to the long time payout at the higher royalty (if the well is successful).
It is very wise to get a good oil and gas attorney to review and edit any draft lease. They are usually not in the mineral owner’s favor.
The township is quite active with pending horizontal wells all around you.
Problem with owning minerals in NM is that you have no leverage unless you are willing to not lease and participate in the wells. Otherwise, you turn down their “fair” offer and they will just force pool you and then frowns for you.
You may think it’s way low, or whatever, but unless they feel like giving money away the offer is the offer. Pick one or the other. Or get force pooled. Or participate in the wells. Or go to Santa Fe and protest the forced pooling. Or lease to somebody else.
Maybe I’m wrong, happy to hear any other interpretation otherwise, as this has always seemed pretty uncool. But look at an NMOCD docket. Its a gaggle of forced poolings.
Thank you Martha, I will definitely go for the .25
@NMoilboy thank you for your perspective as well. It does seem the big boys have us over a barrel.
Don’t they have to prove that this is fair market value? If so, ask to see the other deals they did in and near this section? Like ask for all deals they have within a township of the section? Also, offers and rejections. Finally, dig for other metrics in the area.
I thought you could counter them and ask them to show you how their offer is market value. Just kick it up some with them and they may be willing to actually bargain in good faith with you rather than go to the Oil Conservation Division with the threat that you’ll show up with lots of good faith questions as to market value.
Am I off base?
Was your acreage not already part of the Oxy lease? I thought all of the section 8 acreage was under Oxy. We have mineral rights in that section and I have been following the Marathon plan to what extent I can. I assumed my acreage would just be transferred from Oxy to Marathon at some point and I wouldn’t be eligible for a new lease or bonus? Does anyone know how it works if Oxy plugs both wells and works out a deal with Marathon to drill the horizontal wells?
There are two Oxy wells in Sec 8. The older Morrow well (Villa A Com 1) is dedicated to the S2 of Sec 8, the horizontal 3rd BS well is (Villa A Fee Com 2H) is dedicated to the N2 of the S2.
So if someone owns in the N2 of the Section there is nothing holding their acreage/lease. Thus one would assume someone with unleased acreage would be in the N2. If you own in the S2, should not expect another lease or bonus.
Anybody who owns in Sec 8 will have some share of any well drilled that is dedicated to their portion of Sec 8. Be it MRO or Oxy or whomever.
The Villa B wells are held by the N2 of section 8 as far as I can tell. Thanks!
They haven’t produced anything since Jan '24. And probably haven’t produced in paying quantities since '21.
You’re not off base, in theory.
They have to offer fair market value. But, they made an offer, they say it’s fair market value. So what then? They are not giving you any info. Pretty much YOU would have to prove that it isn’t, based off of publicly available information. Of which there is probably zero. It’s not like going to realtor sites and looking up comps. You will not find out how much bonus private land owners received unless they tell you, and frankly, a lot of people probably took similar terms. In an uncontested hearing they will just need to show that they sent you an offer. In a contested hearing you would need to show that its not fair, and MRO probably has a number of folks who already took the terms you were offered.
You can and should counter them. It doesn’t hurt unless they are absolute jerks, and they probably are not. But in the end, they probably don’t have to pay you more, and IMO they end up getting the best deal if people reject their terms and just sit pat forever.
It’s a terrible system for private land owners compared to Texas.
For the OP, I don’t think you need to rush out and do anything. Nothing is happening here. MRO and MRC are fighting over how units will be formed in this area. See NMOCD case 24232. If it was me, yes, I’d ask for more money. Or I’d lease to somebody who isn’t Marathon who is big enough to negotiate with Marathon. But your negotiating position as a single non-oil business individual vs an operator is not strong.
They have not been in paying quantities. My acreage is half in the south and half in the north of section 8. So, they will have to release my acreage in the northern half? Thanks a bunch for the information, I’m obviously pretty new at this.
Depends on your lease, if you have a lease that is held by the wells in the S2 then they will not have to release you. The whole lease is held by those southern wells in all likelihood.
Thanks for your great input.
I countered with $9k/NMA and amendments to the lease.
They responded with $5.5k and are still mulling over my o&g lawyer amendments.
I remember a phone conversation with the land woMan that they plan on drilling in November 2024.
Thoughts?
IMO that is still low relative to what a free open market would get you (which may not exist for all intents and purposes), but seems like progress.
IMO no chance they are drilling here soon. As far I can tell they haven’t even applied to the BLM yet for permits and are still in regulatory poop fight with Oxy over who will operate here, next status conference in Nov '24. (case 24232)
If it was a free market, what do you see as a fair NMA bonus? Thank you for your help.