One of our leases expired in February of this year. The legal description is 158-100-16 SW1/4; we own the land in the SW1/4, but only 1/4 of the minerals.
We have been contacted by a Diamond Resources who wants to lease and has offered $1,000/acre and 20% royalty. I think we can get more, but don't want to seem greedy. I also have mineral interest in sections 21, 28 and 2. In section 2 we have a producing well; in section 28 there is a well that was completed in January 2013 and is part of the spacing with section 33.
I leased the minerals in section 21 & 28 for $1,000/acre and 20% in 2010; (I also received a check 2 days after lease was signed....no bank draft.) Since then there has been a flurry of activity in the area, specifically with Petro-Hunt (now G3), Zenergy and Crescent Point.
My thought is, since 2010 with all of the activity, I think we could get more for our lease in 158-100-16; what would be a fair amount for the lease (I know the leasing company will have a differenct idea of what is fair).
Thanks for any advice.
I own 10 acres of minerals under 158-95-11. I asked the same question and was advised to ask for $2000/acre and 20%, but not less than $1500. So when Diamond called me to top lease my minerals for $1000 I told them I would like $2000. They would not go that high and did not make me a counter offer. So I am patiently wait as I get closer to the end of my lease in August to see if I get any better offers.
Linda, XTO operates the well next door in spacing 10-3, I would be contacting them. 98,686 barrels in 4 years with 1,406 barrels last February isn't a wonder but it isn't bad at all either. Completion techniques and production are better now than they were in 2009 also.
Linda Head said:
I own 10 acres of minerals under 158-95-11. I asked the same question and was advised to ask for $2000/acre and 20%, but not less than $1500. So when Diamond called me to top lease my minerals for $1000 I told them I would like $2000. They would not go that high and did not make me a counter offer. So I am patiently wait as I get closer to the end of my lease in August to see if I get any better offers.
Ed, the recent wells in your area seem to produce between 49k barrels oil and 59k barrels oil in the first 7 months which is pretty good. See my reply to linda above because her well next door to her that was probably completed old style is profitable at 98k barrels in 4 years and your well should do that in less than 2 years. Linda, if you are reading this, your well will probably have up to date completion also when it is drilled and be a better producer than the well next door. Sometimes it's a good thing not to be first.
If you have an expired lease and you put the word out that you have these acres to lease, you should be able to get a better offer. You are in good areas, you have offset wells that makes your acres about as close to Proved as you can get without actually having the well on your lease. How much is it worth for acres that you "know" there is oil under them? True, there is not a frenzy as there was in 2007-8-9-10 but the operators know where the best areas are and have a good idea of how much they can get drilled in the next 3 years. The closer an operator gets to drilling on your spacing, the better the offers should get.
If you were going to drill as operator a derisked well that is as close as it gets in oil and gas to a sure thing, would you want someone else to slip in and lease some of those low risk but profitable acres out from under you? Heck no! That block buster is going to ask 23% royalty and alot more cash than you the mineral owner will, or worse yet, want to participate for your leased acres and the operator makes nothing! $2,000 and 20% is not too much to ask. Tell your potential lessees that you are seeking other offers, if they think you are only dealing with them, that they are the only game in town, they don't worry about someone else leasing your acres and likely think you will be sitting there waiting, for them to pick up later. Lessees are not immune to lost opportunity but they may not realise that is what they are facing if you do not tell them. If you own minerals, congratulations! You are in business. How much effort are you putting in to make sure your business prospers? I know you are here and that is a good start. Patience is good but effective bargaining strategy added to patience is even better. Ed, Linda, you are in good areas, make the most of it.
I recieved 20% plus $1500.00 per mineral acre in December 2012 from Diamond. They are representing CLR. Our land is in 158-96. good luck! I felt happy with our offer. Three year lease.
We just negotiated (yesterday) the same deal...20%, $1500 & 3 years and for CLR.
Linnea Alley said:
I recieved 20% plus $1500.00 per mineral acre in December 2012 from Diamond. They are representing CLR. Our land is in 158-96. good luck! I felt happy with our offer. Three year lease.