We have had a lease offer and have no idea what would be considered fair terms in this area.
If anyone has input we would appreciate hearing from you. Thanks
Lea county is where most of the oil in New Mexico comes from, however I was offered lease for 80 acres in Roosevelt County, 1/16 out of the hole and $50 per acre Bonus, I asked the land man if they paid a different price than in West Texas. No he said, but we're wildcatters and we do things differently. At that time we had just signed lease for $500 an acre and 25% out of the hold in Ector County. What ever you do, GET an Attorney to look at your Contract. My last attorney saved the Family $350,000 with one paragraph. Oil Company came to us and told me that we owned land, even though I could not find any evidence of that, we agreed to lease the land to them $5000 an Area and 3 years lease, no option, they paid for two 3 year leases, and then they came back and said they were in BIND, needed to release but would only paid not $4900 period for the 3 year lease. I said doesn't sound like your in real bind yet, so we'll pass. Mean Time Aunt Died, and her trust made them run the title to that land again, and they found some new owners, however because of the Lawyer and the phrase he had us place in the Lease, we didn't have pay by any of the lease monies. So I like to say, it's cheaper to see an Attorney, than not too. Especially when it comes to Oil and Gas.
Best of luck to you
Good information, thanks Chris.
Have some mineral interests in 15S 37E, first offer was $500 for 3-year-lease with 25% increase on a 2-year-option. Later got on offer for $700 per mineral acre on a 3 year lease with a 25% bonus on a 2-year-extension option. Took some pretty heavy negotiating but we got it up to $800. My family owns almost the entire section so we were able to bargain as block. From what i can tell $500 - $800 is a fair offer. for this section of Lea County. But you may be able to get a better offer if you shop it and as Chris mentioned, definitely have a reputable lawyer review the lease and any addendums. I think the further south in the country the more actual drilling that is taking place. I don't expect to get rich off my 20 net mineral acres on royalty but sure was happy to get the lease bonus. Good luck to you.
Good to know, I think the initial offer we got was a little low. So, I'm trying to formulate a reasonable counter offer. Your info was very helpful, thanks.
Russell, I have another question, if you don't mind.
When you said a 25% bonus on the two year extension, did that mean 25% over the bonus per acre for the original three year lease. You mentioned the royalty also, what would be a reasonable amount to expect that to be? I was offered 14% which seemed a little low to me.
Thanks again,
Yes on the 25% for a two-year extension option on the lease. I'll have to go back and look at the royaly percentage. You do want to make sure that royalties are calculated "at the wellhead".
Yes, that's one of the things I've realized about the royalties after doing a lot of reading on this forum. Without that provision it would seem possible to see any royalties eaten up by production costs. Thank you so much!
No problem