We received an offer from Antero and countered with 1.) 20% royalty on all oil, gas, and NGL’s. 2.) No Post Production Costs 3.) $4000/acre bonus 4.) Terms of the lease reduced from 5 years to 3. Here was his response: I am presently working with 9 lessors that have lawyered up, and the ask is 20.0%. (As the Attorneys want their piece of the pie) They have been sitting as denied sense August 2024 as Antero is not giving 20.00%. On that alone, if I take your offer to Denver Office for approval, they are just going to park it as denied.
I also know that “No Post Production costs is also a RED Flag as well as the 3 years only. SO, the only thing I am working with in your favor, at the moment is the $4000.00 per Acre.
Could I suggest that you get back with your brothers and see if you all may consider something more like $4500.00 @ 18.0%, That would put more money upfront on the lease.
$4000.00 X 20.3333 = $81,333.20 ( your ask)
$4500.00 X 20.3333= $91,499.85 (our counter upon approval from Denver office)
So basically, we are dropping 20.0% to 18.0% for about $10,000.00 up front.
We would also need at least a 5 year only lease, as this is a tough area with many heirships to research and lease.
Three years is just too short of a timeline. 5 years would be our minimum.``` Lastly, we have the issue of the “No Production Costs”. Antero also does not offer that Clause any longer as well.
I can give you the following which is as close to it as we get.
Wellhead Royalty – No Deductions
It is agreed between the Lessor and Lessee that, notwithstanding any language herein to the contrary, royalties payable on gas shall be based upon Lessor’s proportionate share of the gas produced from the Leased Premises at the royalty rate provided herein and is calculated by multiplying the (i) MMBtu content of the gas produced from the Leased Premises, measured by a meter at or near the wellhead, by (ii) Lessee’s weighted average sales price for gas sold from the same field during the given calendar month (“WASP”) free and clear of all costs or deductions for exploration, drilling, development, operation, production, separating, treating, dehydrating, gathering, storing, compressing, transporting and marketing such gas. For the avoidance of doubt, Lessor and Lessee expressly agree that the royalty is calculated based on the MMBtu content of the gas measured prior to processing and fractionation and Lessor will not receive an additional payment for any natural gas liquids extracted, processed, and created from the gas produced from the Leased Premises, if any.