Hi, this is my first post on this forum. I have been offered a two year extension on a lease I signed and negotiated in 2011. The oil company did drill a well and has a successful, producing oil and gas well. The oil company wants to drill a 2nd well and is offering me the same bonus I negotiated in 2011. I think I should ask for a higher bonus as obviously there is oil and gas under the property. What do you think? Thanks.
If the successful well was drilled in Section 1, t19s, r34e, I would think the lease would be considered "held by production". But if not, I would try for better percentage and give up the bonus, since the area is "de-risked", i.e. there is oil down there. Was the well vertical or horizontal?
The company wants me to sign an extension lease keeping the same terms as the negotiated lease. The royalty is 25%. I believe the well is vertical. Also the original lease has a 90 day continuous development clause. The original lease is due to expire in a few weeks. Thanks Bob!
You are getting 25% and that is top percentage. I don't think they will go higher, so go for the bonus. I like that 90 day clause; it makes things move along faster. Who is the operator? The big public companies tend to keep up the pace; smaller operators sometimes have capital squeezes. You might shop it around and get a larger bonus from a competitor. Good luck!
The Operator is Diamondback Resources. They pay the gas and Plains pays the oil. Thanks for your help Bob.
What would be a good lease bonus offer price. They are offering 500 per net acre. It’s a small interest. Only. 5 net mineral acres owned by be in the entire S/2
That’s 5 nma not .5
I don't know the current market offers. I have interests in vertical wells drilled in the 1930s. I understand that with the expanded Wolfcamp and horizontal drilling and fracking, there is some activity going on, but I have not been approached. I'll certainly let this forum know if and when. In Oklahoma, in the Woodford shale, I have been offered $5500 per nma - to purchase, not to lease. Others have been offered $12,500 per nma. The last lease bonus offered was $1500 per acre for a 3/16th. My hunch is that if they have offered $500 they may go $750-$1000.
Dear Rick,
As a matter of course, I typically do not recommend extensions of oil and gas leases. I prefer a new lease form, even if the bonus and royalty do not change. There can be additional or corrective language used to strengthen the form and increase your protection.
A short blog post that I penned is located here:
http://www.mineralrightsforum.com/profiles/blogs/i-have-been-asked-to-extend-an-existing-lease
Best,
Buddy CottenWell We never signed the extension agreement and now a new company wants to lease this same property for 3 year, ¼ royalty, 850 pnma lease bonus. Will counter with 1000 pnma bonus plus our addendum.
i agree this is normally held by production unless they did not lease all of the area.
After months of hearing nothing on this lease offer, we received a call from the landman representing the company. Finally settled on 2,000.00 pnma, ¼ royalty, three year lease term with our addendum. Guess it pays off to be patient…