Hello. I own about 8 net mineral acres in S6, T152N, R98W. I received a letter from Brigham indicating that I needed to make a choice between participating in the well or accepting a 3/16 lease with a $1,500/acre bonus. I called the landman back to try to get a quarter royalty, but he would only go to 20% and $2,000/acre. I'm looking for some feedback on whether or not I should accept these terms. Thanks in advance.
Paul
Paul, it doesn't sound like a bad offer, 20% and $2000. I do doubt you have found the most they will pay. I looked at the recent wells around you and found very good production, several in the 80,000 barrel range in 4-5 months. Even if you didn't want to go non consent and have the operator carry your interest in which you would receive a 16% royalty from the first barrel and the other 84% would be going to pay off the well plus a 50% penalty of the actual cost of drilling, which after the well and penalty are paid off you receive 100% royalty. If it never pays off all they can do is place a lien against the future production of your minerals. I think it's a very credible option. I also think you haven't reached the highest amount they will pay until you are no longer speaking to the landman. The landmans employers told him how much to get the lease for, they did not tell him how much they are willing to pay. The landman could very well be trying to make some commission off your deal, some bonus $ and an override on royalty if he can sign you cheap. If you can be firm and only talk to Brigham, not a landman who doesn't even have the authority to give you what you ask, you could bump up the last counter offer you received. I have looked at the records between oil companies assigning leases 23% was the royalty retained in the ones I looked at. If you want more you have to hold out and tell them firmly what you want, and stop dealing with someone who can't give you what you want, the landman, who may be trying to make money out of your side of the deal. I personally have gone non-consent on 4 wells in an area as good as yours. It;s working for me, it can be a big stick for you while negotiating your lease.
Paul, are you still around ? any update ?