I have received an offer for a paid up lease on 213 net mineral acres I own in Ward County, Texas. I inherited several mineral rights in Ward County from my dad who inherited them from his dad. I don’t know much about any of this. How do I go about properly analyzing the offer to be sure it is fair?
I forgot to add - it is abstract 658, section 36, block 34 for this offer.
That’s a good question you pose and I hope I’m in your circumstance soon, analyzing an offer that is. Before the bottom fell out, back in December 2019 we were being offered $2,500 a NMA in Blk 34. Today, we are without a lease and aren’t having any offers made. Given the climate of the oil business, I’m interested in what those in the know have to say.
They have offered $500 an acre. I just don’t know enough to evaluate if that’s a fair offer.
Section 36, Block 34 is in a weird area in Ward County. Its very close to the dividing line between the Delaware Basin and Central Basin. Seems to be on the Central Basin uplift, which means $500 per nma is probably fair. Delaware Basin acreage would get a significantly higher lease bonus.
Make sure you are getting a 25% royalty rate. That’s more important in the long run if wells get drilled.
Which company wants the lease?
Don’t take $500. If that area was getting $2500 previously it should bare that now. Hold out. They cannot make you sign. They’ll eventually come around to $1,500 to $2,500 once every one else has signed and u are all that’s left. They don’t want to go into a Carried Interest situation with you. Downside is $500 an acre lost. Upside is more lease money with the RI or a Carry.
They are offering 25% royalty. And they aren’t looking for all depths. The letter said only the deep depths below the wolf camp.
Standard 25%. Makes no sense on depth. Gotta go through wolf camp to get to the Cline A-D and my experience is it’s very hard to trust/verify w he at zones the laterals are producing
Thanks for all the input. I’m considering my options. This property along with several others in Ward County have been in my family since at least the 1950s and some since the 1930s. There haven’t been any offers made to me since I’ve owned it (about 6 years now) and my dad didn’t have any offers in at least the last 30 years. I had just assumed everything had been drilled but I don’t know much about how it all works. Thanks again.
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