Austin Chalk Lease on top of Eagleford Shale

Can someone share with me their thoughts regarding a lease proposal for only the Austin Chalk and how that might affect the ability to lease deeper formations such as Eagleford, Buda, Pearsall etc?

The same oul company has attemped to lease Austin Chalk but it seems to me that the other formation are potentially far more lucrative and i certainly would want to be absolutely certain that a lease for the Austin Chalk would not adversely affect the other formations.

Also, when only leasing for the Chalk, on a three year term, 1/4 cost free royalty, how does a bonus of $200 per nma sound? My gut says that is very light but i need to hear from others.

Thanks

I would be a little careful. I have heard some people refer to the Eagleford as part of the Austin Chalk. Ask more questions about what exactly they are looking for. What county are you in?

Dimmit County, north east of carrizo springs. Our production is primarily oil and liquids with some gas. CHK drilled seven wells and sold those to Exco. Much land is open due to only units are holding any portion. Others in our tracts have leased post CHK to another co.

This current group claims to have all but ours but i am not sure knowing that others have leased elsewhere.

Chalk wells are much cheaper to drill than Eagle Ford wells due to not having to frac the laterals. Eagle Ford results in this area have been less than great to even uneconomic historically. Make sure you have a solid reference point as to what base of Austin Chalk is ( tie to existing local well and get independent confirmation on this pick). Plus make sure lease has wording to ensure operator getting directional data to share with you to make sure any horizontal is not drilled into section below the Austin chalk. The royalty and term looks good to me but bonus seems light. I would shoot for $500 per net acre and not settle for less than $350.

Thank you Rock Man,

Last year offer was $350 and I had no interest below $700 and $1500 for all depths, this year the initial offer was $200 for shallow.

I am less than excited about this but don't want to hold up development. More importantly however is that I don't want to restrict future development at greater depths as I believe that will be more lucrative to the royalty position.

I did receive a call from a landman several months ago wanting all open acreage and willing to do $1500 but another friend pushed for $2,000 and there has been silence. what do you think is current market for all depths?