Also need suggestions

I don’t know how to find out exactly what my grandfather had and his dad. I’m new and trying to find out how to find the deeds and property. I have received a letter from a petroleum company and they are telling me they want to lease 3.73333 and royalties are3/16

The landman/company offering you the deal can do the title search. I would suggest 1/4 on the royalty though. If you don't mind me asking, what was the per acre lease amount.

You will have to hire a landman to research the public records to review the chain of title to determine how much you actually own. Depending on the area, you can almost always negotiate for more bonus and more royalty. The lease form is also negotiable and of the utmost importance. Let me know if you have any specific questions.

They are saying $5OO

For 3 years and a optional 2

Not sure what section you are in Lea Country. But My family owned almost an entire section combined, just northeast of Lovington, so our original offer was $500 and 3/16ths royalty. Then got another offer for $700 per NMA which for our section was a fair to good offer based on what i could find. We negotiated 125% on on the 2-year-option per acre and 25% royalty paid at the wellhead. The option is a big deal to the lessee because if they decide to drill it takes time. I suggest you have an attorney experienced in mineral leases in New Mexico to review any contracts before signing them. I think you could find plenty of suggestions on this board.

And as Jimmy said below there is always room for negotiating. It appears they are starting to lease up sections in the central to northern part of Lea County based on the activity I'm seeing on this board. Not much drilling going on. Most of the drilling right now is in the southern part around Hobbs from what I can tell. Maybe just speculation. This area sits right on the edge of the Delaware Basin (part of the Permian Basin). But with the new drilling technologies they may be planning on drilling. I only have 20 NMA so i don't plan to get rich on royalties but the lease bonus was a nice injection of $.

What area are u in

What is the location of your interest if u don’t mind me asking. I have rights in S1 T15s R36e northeast of lovington

Just trying to get an idea how close your mineral rights are to mine. They are offering me 750.00 pnma and 25% royalty.

How is the bonus calculated? Mine seems really low compared to what I read on this forum. How do, should I confirm that this guy is legit!
So new and want to be sure I’m doing all things right.

Bonuses are generally a specific dollar amount per net mineral acre. Here is an example: Suppose my ancestor owned all of the minerals under the West Half of one section, and suppose the section is a standard 640-acre section. The half-section under which I own is therefore 320 gross acres, i.e. it is 320 surface acres. Suppose I have inherited 10% of what my ancestor owned. So I own 32 net mineral acres under 320 gross acres. I might like to receive a lease offer for 25% royalty, 3 years, at $750 per nma. If I could culminate that deal, my lease bonus would be the 32 nma’s multiplied by the $750 per nma = $24,000. To carry this example further, let’s suppose a horizontal well is drilled and the acreage assigned to it is the west half of the west half (W/2 of W/2, also written as W/2 W/2). I want to calculate my decimal interest in the well. Generally the decimal interest arithmetic starts with your number of nma’s under the gross acreage of the well. The W/2 of the W/2 would be 160 g.a. Under the 160 gross, I own 16 nma’s. The decimal interest is my 16 nma’s divided by 160 g.a. all multiplied by the 25% royalty as per my lease. Of course we already knew that my ownership is 10%, so the arithmetic quickly converts to 10% of the 25% royalty. That gets me to 2.5% or 0.025. My decimal is 0.025. That is the number I should see on the Division Order I’ll be asked to sign, and I should look for it on every royalty check stub too. Suppose the first month’s production is 400 barrels of oil per day x 30 days. . . sold at $70 per barrel. 400 BOPD x 30 days x $70 = $840,000 gross revenue for the month. $840,000 x 0.025 = $21,000 . So my first royalty check would have a gross amount of $21,000, less severance taxes. Hopefully my lease prevents them from taking other deductions, e.g. for processing or marketing. Anyway, that’s the basic arithmetic.


Thank you for that. I was not the one that asked the question, but you gave me answers to questions I had.