Block 56, Section 17 and 18

I have received a lease offer for 3 years, 25% royalty at $5,000 per nma. Is this a good offer?

We renewed a 3 year lease on 56-16 Feb 2016, $4,500, 1/4

Jeez, I wish we had gotten that when we renewed in 2013. Prices have definitely gone up. (we got 2000 pnma then.) I think that sounds good! (But now our land is producing...)

That is in EOG's area of interest. While they may not budge much above $5k/ac, there are a lot of other companies that will. I'd recommend you shop the property around a bit. You could try the forum sponsors. Best of luck!

Thank you, Alton. This info helps.

I only got 1750.00 pnma in 2014. Do you did good. Where are your mineral rights? Wish mine would produce!


The offer is reasonable but not fair if lease terms are questionable THIS WILL BE YOUR LAST LEASE. Make the terms good for the future. Great geologic potential. Not proven yet but with H drilling highly prospective.

Gary L Hutchinson

Minerals Managment

Gary, thank you for responding. What do you mean that this will be my last lease?? Who is H, and how do I get good lease terms?

Thank you!

Mary, the best way to get good lease terms is to get competing offers. If EOG, or their broker, is the one that made the offer, they have a reputation of not budging much on terms. However, that can change when a competitor enters the bidding. Once you have the strongest bonus you can get, the rest of the lease form is relatively straight forward. A 25% royalty paired with a well-drafted retained acreage clause are the big ticket items to look for. It appears your interest may cover 1280 gross acres, and with that being the case, a well-drafted retained acreage clause would provide you the opportunity to lease again in the future. As previously noted, you might consider reaching out to the forum sponsors to see if they can find some competing offers.

Best of luck!

"H" is for horizontal.

Only lease to the most probable permittee or a viable, well financed company that desires to use your acreage to participate in what will be a massive unit compared to pre 2013 units. Set your bonus amount on some lump sum that help you regardless of your title, make sure that the measurement and payment of your royalty is confirmable through public information, limit the lease to formations exploited by horizontal drilling with a time limit, to name a few.

If you think your heirs may want to sell the income stream from royalties, make the royalty provision iron clad. Keep in mind that the lease agents backers are basing what they will pay (not offer) on the science determining the geologic potential of how much oil can come out of the ground at a profit (proven reserves) In order to make a fair trade you must know the science as well. It is not a game for an operator to risk $6 million to $11 million on a well. Do you think they well give the lease back if the well is marginal? No they won't. The success rate for horizontal wells is nearly 100%; a far cry from 12% completion rates pre 2008.

Yup, probably your last lease. The bonus will be long forgotten but the royalty will long endure. If not on the first well, the many that will probably follow over the decades in Reeves County.

Did you read where the richest county in the the US by per capital income is associated with the horizontal drilling of the Eagle Ford shale in Texas? In the next 5 years, Reeves will be in the top 10. Make sure you get your share.