We have received a lease offer from Endeavor Energy. They are offering bonus money per NMA and 1/5 Royalty. We are novices to this kind of offer. Can someone define 1/5 Royalty and advise as to whether it makes sense to counter with 2/5 Royalty (or am I going backwards with this counter offer). I know they will increase the bonus money, but am unsure about the 1/5 Royalty. This property is in Martin County and we own 2.182551347 net mineral acres. The lease would be for 3 years. Any feedback would be appreciated.
Dear Ms. Kocal,
You need to have a tight lease form dealing with Endeavor. They were chastised about 10 years ago by the RRC here in Texas for falsely reporting non-producing wells as producing wells to hold acreage. I heard even the valves were rusted shut.
20% is ok. 25% is better. 40% (2/5) will not be accepted. You might end up with 22.5%, but the lease form is more controlling at this point. Your mineral interest position is so modest that if they tripled the bonus money, it's still not a lot of money.
Watch Black Gold on TruTV. The oil company is Endeavor and the drilling contractor is Big Dog.
Thanks Mr. Cotten. Very helpful.
Buddy Cotten said:
Dear Ms. Kocal,
You need to have a tight lease form dealing with Endeavor. They were chastised about 10 years ago by the RRC here in Texas for falsely reporting non-producing wells as producing wells to hold acreage. I heard even the valves were rusted shut.
20% is ok. 25% is better. 40% (2/5) will not be accepted. You might end up with 22.5%, but the lease form is more controlling at this point. Your mineral interest position is so modest that if they tripled the bonus money, it's still not a lot of money.
Watch Black Gold on TruTV. The oil company is Endeavor and the drilling contractor is Big Dog.