I received a 3 year lease offer with a bonus of $500/net acre and an option to extend for 2 years at $500/net acre. The royalty is 1/4. Is this a fair offer? The bonus and offer to extend seem low to me. I have about .5 net acres in each section.
Your minerals are on the Central Basin Platform. The CBP typically does not enjoy the sky high bonuses seen in the Delaware and Midland basins. A 25% royalty is the highest you will be offered. The 3-2 term is ordinary, though I appreciate many in this forum are opposed to the inclusion of the 2 year kicker. You can try to negotiate more bonus, and even hold out as an unleased mineral owner. Maybe some of the professional members will weigh in with the highest bonus/acre they know to have been paid for minerals on the CBP in Winkler. Which company is trying to lease your minerals? Have you leased them before, and if so, how does this offer compare to the earlier one(s)?
The 432 Land Company, LLC through landman Doug Ferguson is trying to lease the minerals. I have not this interest before this offer.
I am assuming 432 Land Co. has been engaged by an oil company and is not flipping the lease because the initial offer was not a lease with a </=20% royalty and $200/acre bonus. At the top of the page, enter “Unleased Mineral Rights - production established” in the search bar and read the link I posted July 2019 regarding rights and responsibilities of mineral cotenants.
Many oil companies do not want to divulge their identity as they build up an acreage position for development. If you are especially concerned about the assignee, you can add a clause requiring your consent to assign. Or you could name a particular company to which the lease cannot be assigned. Keep in mind that your negotiating strength is related to the net mineral acres you own. The oil company can drill if other co-owners have leased and leave you as an unleased mineral owner in the well.
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