I am new to this and would love feedback. How would I go about determining if the offer I received for a mineral lease in Washington County is good? I own a very small % of the acreage split among several people thus my interest is tiny.
Welcome to the forum! Generally, first offers tend to be a bit low just to see if someone will bite. The bonus is not the most important item in the “good” category. The terms of the lease are so much more important in the long run. Most people want their royalty as high as possible. Texas mineral owners usually want 25%, but that does depend somewhat on the area. It is VERY important to get a good TX oil and gas attorney to look at any draft lease and make the suggested edits. The draft that you might get in an offer is most likely all in the operator’s favor and will cost you more than you know in the long run.
Good attorneys are posted in the Directories tab above or you can go to the Texas Bar Association and select one with an oil and gas focus. Best to get one in your region as they would know that is being offered as far as bonus/royalty pairs and can help you get a better deal. Some leases can hold your family for decades, so best to get good advice up front. If several people share the acreage, you can split the attorney fees and all get a good lease!
Thank you so much for your advice.
Since there hasn’t been much new leasing in Washington County I’d be interested which part of the County you’re in. If you aren’t familiar with the Railroad Commission’s online records and are interested in learning if any drilling permits have been filed recently in your area, post your legal description, or just the abstract number where your interest is located, and someone should be able to help you.
You mentioned your interest being split among several people. If you aren’t already, I’d suggest trying to get as many as possible to agree to share information and work together on leasing. The larger the interest you can combine the more leverage you should have in negotiating. Lease bonus amounts and royalty percentage being paid for leases don’t get recorded or become public information. Normally the only things that appear in the county deed records are the parties involved and the term of the lease. Often the only way to get a handle on what leases are going for in a specific area is by talking to other mineral owners.
Dusty, I’m assuming the abstract number is the number followed behind the letter A printed on my letter. If so, it’s A-198. I am not familiar with the RRC records or any of this process. I’m curious to know what the oil & gas company might do next if I do not accept the offer by the deadline and the other folk who own part of the acreage do?
Abstract 198 is called the Green Dewitt Survey. Below is part of RRC’s map with A-198 outlined in blue.
Over the past couple of years that area has been one of the most active parts of Washington, Fayette and Lee County, that join there. The green dots on the map are producing wells, and the blue circles designate drilling permits approved by RRC but where wells haven’t been completed yet.
A few of those blue circles are where permits approved several years ago expired without a well being drilled. But most of the blue circles near A-198 are permits approved this year.
Based on the number of producing units already formed in that area I’m surprised your interest is still available for lease, but I don’t know which part of A-198 you’re in.
Magnolia O&G and Ironroc Energy dominate the activity in that area. If the lease offer you got wasn’t from one of those companies I’d question whether the folks making the offer control enough acreage to drill a horizontal well, or are hoping to flip leases they acquired to one of those other two operators at a profit.
Regarding your question about what that company might do if you don’t accept their offer but other interest owners in the same acreage do, try searching the forum for previous discussions on that by entering key words like “unleased mineral interest” in the looking glass feature at the top of the page.
Several of the recent permits Magnolia has gotten approved involved multiple existing units they operate being combined to form new 1,000+ acre coop units where they plan to drill “allocation wells”, another term you might want to research if you are familiar with it.
Magnolia just applied for a permit to drill a second long lateral allocation well in a unit that includes Abstract 198.
Interesting. So Dusty, are you suggesting that might be the area my family owns.
Below is the plat Magnolia recently filed with the drilling permit application for a well called the Sparky H01 SS. The plat shows the drilling unit includes Washington County Abstract 198 along with three other surveys joining it that are in Fayette and Lee County. The plat also shows the proposed horizontal path of a well called the Sundevil H03 that Magnolia permitted in that same unit earlier this year.
I don’t know where in survey A-198 your mineral interest is located but it looks like this unit includes most of that survey. Since Magnolia is drilling these as allocation wells, determining if your interest is involved could depend on whether the horizontal leg of either of those wells actually crosses your interest.
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