First time so I don’t understand any if this. have X acres at 100%. 2 years at 100 per net mineral acre on a geophysical with an option to acquire and oil and gas lease on a 3 year at 400 per net mineral acre.
My question is what bonus pays here? geophysical, oil-gas lease or both? if both is the oil-gas at the signing or when the option to acquire is completed?
Thanks
You need to get a Landman or attorney to look at this. It appears you got an offer for an option. The company buys options over an area, conducts a geophysical survey then leases the acreage it deems most prospective for oil & gas. Net acres just refers to your ownership percentage in the minerals times the number of gross acres in a tract of land (for instance, you own a 5% interest in 100 acres, your net acres are 100*.05=5 net acres).
The option gives the company the right, but not the obligation, to lease the land on the terms set forth in the option.
Essentially the company will pay $100 per NMA to tie up your minerals for 2 years. If leasing prices are higher than $400 per NMA, it will exercise its option to lease. If leasing prices are lower than $400, it can pass or renegotiate a lower deal with you. What about the terms of the lease form? Are those set or negotiable? What is royalty rate? Company forms generally contain terms not favorable to mineral owner and that you may want to change.