Asking Bonus Rate

Any idea on what a good asking bonus rate per acre lease would be? Section 15 Township 23S, Range 26E Eddy County, NM

25% royalty included.

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Do you own a large chunk or a small portion? If you have only minimal interest, its hard to get much higher than what is offered. Whereas if you own a larger chunk, they are more willing to work with you.

I honestly don’t know. I’d guess a good price is between $5k-10k an NMA. Only because you must be in the E2 and Earthstone is planning on drilling wells there.

But again, it’s NM. If you reject their lease offer they hold all the cards on force pooling. I’d be glad it’s 25% royalty and just do your best on bonus.

I’m wondering if you would be willing to give me your impression of a bid for sale of our 10 NMAs (15 NRAs given our 3/16 royalty) , in Eddy County. My sister and I are the owners. The location is T22S, R27E, Section 7 The price offered is 100K, or $6,600 per NRA.

Thanks! Eric Blair

That’s not unreasonable IMO. I’d ask for more. Nothing crazy, but I’d guess you could get another $10-20k. Maybe not.

SPC finally has a rig and is drilling in Section 5. So reasonable chance that you would see at least a well or two there in the next 2-5 years. But they also have gone a long time without doing anything. And you kinda need 2 wells+ to beat $6.6k/nra.

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Thank you! I really appreciate your input!

Hello Eric, Your user name was mentioned to me by Nmoilboy following a question I had concerning a similar situation as yours, or at least in the same location as yours. I was wondering if you sold your 10 NMAs? I also received offers and have no idea what to do. Thank you. Philip

I leased mine to Earthstone for $2.5k per NMA with 25% royalty for 1 year, with a 1 year extension.

So for the 2 years I’m getting just shy of $70k, plus whatever the 25% royalty pays.

I have 13.75 nma

I would never sell mineral rights. I have leases in TX that pay $7-8k per month for years.

Why take the quick $ when you can have a continuous source of monthly income. I retired at 45yrs old because of leasing.

My 0.02

Sounds good on lease terms.

Re: selling. The bargain oftentimes is $X upfront or some multiple of $X over a long time IF wells get drilled. Risk/reward math. I mean do you take, for example, $200k or roll dice on a 30% chance at $1m and 70% chance at zero? If you are sitting on a pile of them with no cost basis and they are paying you a stipend it’s a good place to be. Oftentimes that is more about being born on third.

If you have a single tract, and it’s making almost nothing, and there is no indication that it will anytime soon…shrug. Might consider the bird in hand. If you are going to sell, might as well sell high. And now is pretty high.

I have some minerals under Earthstone in 23s26e Sec 21, kinda stumbled into them a while back. Would definitely sell them for less than the possible future cash flows. But…not giving them away either. Ymmv. Always good to have options.

Hello EricBlair, I sent you an email a month ago and was wondering if you would have a chance to get back to me. Thank you so much. Philip

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