Received a paid up 3 year lease offer for a small mineral interest in 4-17N-3W at $125 per acre with 1/8 royalty.
This interest was last leased in 2016 for $150 per acre with 3/16 royalty.
Is the lower offer a result of the current oil and gas market or just a low offer to see if I will accept it without shopping it around?
Also, within a few days I also received Division Orders for 2 wells on that same section.
Unless you own a ton of acres the bonus is insignificant. Focus on the royalty. 1/8 is awful. Also, the devil is in the details of the lease terms.
Richard is spot on. I think I own there too. What are the well names & I can look the production up. BTW, nice handle.
Brown Uint #2 TR#4 - W Lawrie Oswego Lime Brown - Chambers 2 TR#2 - W Lawrie Oswego Lime
So since there are already wells on this property, is the 3 year lease for rights to future exploration/developement?
They are taking new leases because the previous leases expired due to not producing in commercial quantities. The wells had been shut in due to casing leaks.
Price of oil was much higher in 2016, so lease offers were higher. If you can get a 3/16ths lease that would be better, even if the bonus is smaller. They may want to repair the casing leaks or they may want to drill something new. As Richard said, the clauses in the lease are much more important and will probably need some tweaking from the draft they send you.
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