What is a representative of a good percentage then? I have been contacted about leasing section 552 in Yoakum County
Based on this discussion, looks like all my offering is too low:
100 per NMA, 3/16's, three years plus option of two
25% is standard
Thanks!
I personally strive to always get a 1/4 cost free royalty. The lessee wants to keep it less, and often times they keep an overriding royalty which is easier to get when landowner accepts less than a quarter. My suggestion is to make absolutely certain you have a cost free royalty. That is why you are giving them the far majority, anywhere from 75% to 87.5% of YOUR minerals.
The option does nothing for you. It allows them to retain a ceiling on their cost. If market is less, they will not exercise, if it is more, they have a good hedge.
Appreciate the comment about the option portion. Glad to know about when they might/might not exercise the option.