Offer to lease reeves county east part of the n middle part of section 3, byron johnson svy 104 acres

Texas Mineral Rights Reeves County, TX
1

I received an offer for 1/4 royalty, 2500 pnma. My research tells me this is low. I plan to counter. Will you please tell me what you know about lease bonuses in my area? Thanks.

2

Please provide you exact location (Sec, Blk, Twnship, Range)

3

Cami, please see attached maps. I greatly appreciate your help.

17-Bigmap.pdf (2.42 MB) 18-Map.pdf (1.39 MB) 19-Platblocks.pdf (800 KB)
4

Susan, Ultimately your lease will end up in the hands of a risk taker capable of spending $10 million to develop the first well. What those investors/operators will pay to reserve minerals in the ground is based on the oil resources their geologists think are in the ground. If you want to make a counter offer and capture your profits for owning the minerals, you should have a good idea of the geologic potential in the ground. Otherwise, the traders will end up with what could be yours.

In Reeves, the days of exploring for oil are gone. Horizontal drilling and fracking make every well drilled a successful producer. When yu counter, make sure the measurement and payment of royalties is covered. Far more important than bonus amount. Lease terms should be compatible with horizontal drilling multiple zones as well. This could very well be the last lease you ever sign.

Gary L Hutchinson

5

Note my next reply - messed this one up in the process of trying to load attachments. :(

6

Attached are two files:

1) outline of Sec 3 - didn't find a Byron Johnson Survey for some reason

2) offset wells to Sec 3 - three horizontal wells north of Sec 3 were drilled by COG in 2007-08 and each produced 4-5 yrs. None are producing now. They were gas wells. The well just to the right of Sec 3 was a Cimarex well - started producing 04/2015 and ended 11/2015. Doesn't seem to be much around Toyah that is very impressive, at least right now. That said I do know for sure that there have been lease bonus payments of anywhere from $5,000-$10,000/acre just a few miles east of Toyah over the last year to year and a half. And as Mr. Hutchinson mentions in his comment be sure to have someone make sure you have language in the lease that keeps your best interest at the forefront (oil & gas attorney, landman, etc. - someone you trust).

15-ReevesCountySec3outline.pdf (447 KB) 16-ReevesCountySec3offsets.pdf (527 KB)