Newbie questions please

IS the royalty in East Texas (Cass) a standard 1/5 rate? How negotiable is this ?

How do you determine sign on bonus? how negotiable is this?

Does the land man have competition also trying to acquire the same lease?

There is not a standard royalty. The royalty is negotiable, but a 1/4 if usually the highest possible. The “sign on bonus” is offered by the landman. You will not know if there is competition until someone else appears and makes you an offer.

1 Like

Stupid Question Here. What is the incentive to reach out to all mineral owners? If someone says no they still go after the oil.

Virtually all the leases we have negotiated are 1/4 royalty. Just as important is the lease form. If you don’t have a royalty owner friendly form join TLMA and use their form.

Hello very newbie here, I appreciate everyones advice and time. I am in Lincoln, Nebraska and my mineral rights are in Monongalia, county WV. I received them through inheritance from my grandmothers passing. She received them through her husbands passing. So that would make me third generation holder of said mineral rights. I am not sure if I am the rightful owner or really how any of this works.

Believe you have another post on this matter. Everything is negotiable as long as theres multiple parties involved. Since you only have 1 acre, it doesnt leave you in a position to have much if any leverage. One can only determine the bonus offers based off whatever offers they are getting at the time, its not set in stone. For example, if someone owns 100 acres in a hot area, they are going to get much better offers than the person that owns 1 acre in the same section, as the 100 acres could decide whom operates the well.

The incentive to the explorer (operator) to reach out to all the mineral owners inside his prospect is two fold.

  1. In most states, at least 50% of the proposed unit needs to be under lease to meet pooling regulations.
  2. The lease is the grant from the mineral owner to the explorer (operator) to explore for the mineral owner’s minerals. On a single tract of land, without the lease the operator does not have the right to drill. On multiple tracts, the operator only has the right to drill when he has the minimum percentage of owners leased to create a pooled unit.
    These are the very basics. There is more to the incentive from the perspective of how much un-leased acres make the prospect not profitable. But that issue is too complex for this platform.

If they only need to have 50% what happens to the rest?

There are several of us family members who have equal 1 acre interest Should we be trying negotiate as a family even if we only have small individual acreage?

They join in the well, its just not theirs to drill/operate. Ill just be honest with you, even if you get 5 more family members to join you, 6 acres total doesnt leave you with much if any power to negotiate especially when you add 5 more parties into the mix as operators will simply save the time and money to move on to larger interests. Your acreage does set up perfectly for small non-op companies, so Id sit tight until the smaller companies start calling you and play ball with them as they generally are easier to work with and more flexible on their terms.

Joint negotiations can be helpful financially, but can also be like herding cats.

What is a standard time length of lease?

@Michael52 there are a lot of ways to determine mineral ownership. It sounds like you would own them through heirship which would follow west virginias laws for succession. Were you named in the last will and testament from your grandmother? Was she named in the will from her late husband? If there is a direct paper trail it is much easier to track. If not, it can still be determined by heirship and heirship affidavits. Determining ownership, location, and any activity would be pretty high up on my list of priorities which can be done by a landman in WV pretty quickly. Are companies approaching you about these minerals?

Standard lease time varies by area and competition. Most of the leases in many states are a three year lease, but some areas have five years as more common.

The County where they are located and the proximity to other producing wells, as well as the geology and potential opportunity for high-volume producing wells, will all be factors in how the operator will determine the economics of their offers.

It’s a contract, everything is negotiable. You can always ask for more. They might accept, provide a counter offer, or decline your request. It’s the formation of a relationship that, especially if/when it goes into production could be a very long-term interaction, so treat it like that. Invest in developing the relationship. Who can you call with questions? How responsive are they to your questions? What should you expect? How can you be a good partner?

There are no stupid questions. We all started somewhere and if you don’t know what to ask, you are off to a good start asking questions. If you don’t know what to ask, ask the Landman what others are asking? What would they want to know if they were the mineral owner?

1 Like

Hello, I inherited mineral rights in Meigs County, Ohio and would like to know how to go about finding out if there is any interest in leasing or drilling there. I sat on this while Biden was in office but now with Trump’s ‘Drill Baby Drill’ initiative I am hopeful that there will be some activity. I would love to hear feedback on where to start. Thank you.

What do you mean you sat on it? As in you turned down multiple offers due to whom was the president until youd negotiate? Just curious if you are still getting those same offer amounts with Oil prices where they are now? Drill baby drill leads to lower oil and natural gas prices, lower prices = less drilling, therefore much fewer new leases taken.

Sat on it, meaning I inherited it but have not done anything in the way of seeking advice about the best way to move forward. (Ex: Hire an attorney, join an landowners group, etc.) I have not received any offers. I mentioned Drill baby drill because it means more drilling within our country instead of paying other countries for the resources we have here = increased likelihood there would be interest in Ohio vs. Saudi Arabia or Canada. I posted this question on the “Newbie” section of the forum because I would like to start pursuing possible avenues - not because I would not entertain offers. Is this the wrong place to ask for advice?

Welcome to the forum.

The first thing to do is locate yourself on a map from the oil and gas commission. https://gis.ohiodnr.gov/MapViewer/?config=oilgaswells Then zoom into your county and your location. That will get you positioned to see if there has been activity in the past.

Then if you have specific questions. Use the Counties tab above and go to Ohio and then your county and post a question.

If you have activity in your area, the National Association of Royalty Owners has a very active Ohio Chapter. Would encourage you to join as a great way to learn what is happening, network with other owners, etc. www.naro-us.org

1 Like

Great place to ask for advice, not so great to make political references.

A bit on economics as they relate to drilling. Decreased prices for crude/nat gas lowers the incentives to drill. Why would a producer put capital to work at a lower ROR just to drill more? As a mineral owner, you want to achieve the best price for your limited resource asset. You can make a time value argument, but an inherited cost basis creates minimal incentive for sooner/faster vs patience with greater value.

The greatest traits the mineral owner can develop is patience and a passion for research. Good luck to you.

1 Like