Terms of the lease have not been discussed yet but was curios if this sounds like a good bonus?
We can lease this acreage for $400 per acre for a 5 year lease. Then there is a 10 year option at $75 per acre annually.
That ties up your land for 15 years without drilling. Thats a long time and who knows what will happen? If they do drill and hit, then the option goes away, but, of course, you are paid per your interest in the well. Depending on spacing regulations for the well / pool, your land might not be drilled on, but your interest might be included in another well. Neither one of the options you listed is a bonus. A ‘bonus’ is a one time cash payment for signing a lease. Have you figured the monetary outcome for the scenarios?
new to this but now I understand what your saying. But if they are leasing the land and extract lithium, Arkansas has set the royalty rate at 2.5%. I assume they will drill, I’d hope anyways. We inherited this land. All the other land has wells on them and this 18.22 acres does not and wanted to try and capitalize on this land just sitting there. Any, layman terms, advice is greatly appreciated. Like I said new to all this and trying to learn what it all means.