I am in the process of negotiating a lease for property in Lea County, NM with Matador. We have 5 Net Mineral Acres in Township 16 South, Range 36 East, N.M.P.M., Section 10: SW4SE4.
The have offered 3 years of $500 per NMA with the option for 3 years at $700 per NMA and seem very firm on a 20% royalty rate. I have heard from another Mineral Rights Forum user that there is not any wells there currently. Do you have any thoughts on the above options? Should I walk away for not getting 25%?
There are older wells that have been plugged and abandoned or are inactive. That is why they are free to lease now.
The section is partially under the city of Lovington, NM.
SR Permian has filed leases in the area. There are several other agents that were leasing. Wildhorse Interests, BTA Producers. You might see if they are interested.
Looks like permits for horizontal wells have been filed by BTA in the southern part of the township, so contact them first. Not sure if SR Permian is their agent. You cannot always get 25%. The leases that were filed nearby that are public are at 20%.
Thank you. Do you like the 3 year with 3 year option of 6 year lease?
Personally, I never do an extension as too much can change in 5-6 years. I prefer a three year max and take my chances on market conditions at the end of the time. Other operators might be in the area at the time so want more options.