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Hi Nathan,
First off, regardless of the royalty percentage, your bonus offer seems low compared to what we have seen to be the going rate in this area. More importantly, it's always better to negotiate a higher royalty over a higher signing bonus. Your royalty is going to pay you every month, so in the long term, it will be far more valuable than a one time bonus payment. Your math is correct on the monthly payment, other than transportation or any other associated costs that are built into your lease. It is also important to draft a lease that minimizes these costs for you and protects your interests. The basic math you did though, multiplying production by the price of oil by your percentage in the well is correct. Feel free to ask any other specific questions.
Best,
Sean Bellomy
Sean, you have to take into account how many minerals he owns in the producing unit, or as you said yourself, his percentage in the well. The correct way to figure royalty would be…Let’s say its an even 640 acre unit. He owns 320 acres, right there his percentage of the unit is .5. Multiply that by the royalty he is getting(let’s say 3/16). So his ownership percentage of that unit is .09375. At $100/barrel and 1 barrel/day, the royalty check would be $9.38 for 1 day. I know you guys were just doing some basic math, but i wanted to correct because it’s actually half of what Nathan figured. Anyone feel free to correct me if im wrong. Thanks.
Hello guys. I just inherited 16 acres mineral rights in Section 09 T20N (80 acres split among 5 kids) Barton land Consultants have made 3 different offers to 3 of the five kids. $200 acre Bonus plus 1/6, $150 acre Bonus plus 3/16th and $275 acre Bonus plus 1/8th. I found there are no drilling permits on our section and only one close by. There is no producing well in our section. Our rights had a producing well in late 70s early 80s that has been plugged. I asked for $300 and acre and 1/8 thats when they countered at $275. The Rolalty is good only if they drill and hit right? Money now verse bet on the come is my thought for higher bonus.
Some section lease values are up to $300 per acre. Check the Oklahoma Oil registry. Some drilling companies are drilling one well per section, that would cut you portion in half. A lot depends on how desperate your are for money right now as to which one you pick. Last year there were in the neighborhood of 40 wells drilled in Payne county. The Oklahoma Oil registry also lists who is drilling where. The Tulsa World lists the well completions and the Intents to drill a couple times a month. I would check both of those, if you haven't. Barry