A petroleum landman in East Texas has reached out to my family about some small mineral acreage we own. I personally only have about one mineral acre which I had totally forgotten about until he contacted me. It is in close proximity to an active productive well in East Texas. They have future plans to drill a horizontal well that will include our tract of land.
He has reached out to me and other family members, sent contracts for the lease and a sign-on bonus.
It’s my understanding the royalty in East Texas is a standard 1/5 rate?
How do you determine sign-on bonus? How negotiable is this?
Would this landman have competition also trying to acquire the same lease?
Competition? You won’t know unless another landman contacts you. All of the terms of the lease are negotiable to a point. On the royalty, you can negotiate for anything between the 20% offer up to 25%. Lease bonus is all about location, location, location for the most part. The “sign on bonus” is what he offers. Then you take that offer and attempt to negotiate for a better offer.