You should ask for not less than 20% royalty. You can download a copy of the Weld County oil lease form that Weld County bids out, by going here and clicking on Lease #1 or any other lease:
Note that the royalty is 20% and if the oil company does not agree, they can simply not bid on the lease.
Note that the wording of the Weld County lease is much different from the "producer's 88" that they will want you to sign (the '88 is slanted to benefit the oil company)
Early last year I negotiated an "in-fill" lease (small acreage minerals in the middle of their area) with Noble Oil Co. at $300 for a 3 year and 20% and this was out in the Briggsdale area.
This week I have been contacted by Chesapeake and offered $500 bonus (this is the starting offer) for a 3 year extension and he is checking with his boss to see if they will go to 20% but indicated that he has had several landowners asking for 20% as a non-negotiable term. I expect to hit at *least* $1000 bonus when we get to the table.
I will see if they are interested in a reduced bonus in exchange for a drilling commitment and / or shorter leases.
You have to negotiate the bonus and royalty and don't be afraid to get agressive. Chesapeake has recently concluded a sale of 1/3 interest in their 800,000 acres of leases in the Wyo- Colorado area. They sold to CNOOC (china) for what will end up being $4750 per acre !!!!
(same thing if the above one does not work)
CNOOC is China and they are now the worlds largest deep water oil exploration.
CNOOC will end up paying Chesapeake $1.267 BILLION for 800,000 acres of net lease which means that China is paying $1,584 PER ACRE for only 1/3 of the action. To me that translates to $4750 per acre if they got the entire lease on 267,000 (1/3 of 800,000) net acres.
Chesapeake currently has less than 20 drilled wells on the 800,000 acres so CNOOC is not buying proven production for that many acreas at that high price.
CNOOC is granted the right to share in any NEW leases so they will have the option of buying part of (my) lease at that extremely high price.
So.... The first flush of leases from 5 years ago came through and leased at $20 to 50 per acre and now the first leasor has sold some or all to Chesapeake. They leased from us landowners at a cheap rate and then sell for a bundle. Chesapeake is in the drilling business and *now* must negotiate to aquire new leases and maintain the transfered leases.
Spend some time and Google all around Chesapeake and you may come up with a bunch of other info that will give you ammunition for negotiations.
One last thought, be sure to add a clause that will not allow them to lock all the different stratum by producing from only one. There are several approved permits in the Nunn area that are for depths of over 10,000 ft while the existing holes are in the 8,000 ft. area so they are looking for stuff even deeper.