I have been offered $600 acre for 3 year lease with 2 year option paying the same with 20% royalty offering. Tad less than 60 acres of land. Whats the rate now. This has been on the table for a while with several neighbors taking the deal. Deal or no deal. Any advice?
draft or check?
Seems like the offering should be more especially the % of royalty. Shouldn’t it be closer to 25% and the acreage offering be closer to $1200/ac?
My advice to you is that you take it and don’t look back. Those prices probably won’t be coming your way for a long time, if they ever do. Understand that prices like that aren’t being offered in Colorado County right now, they are appearing more in Southern Counties like Karnes, De Witt, Atascosa, Live Oak, and McMullen. If the people offering the money won’t tell you the company they’re representing, it’s probably a draft. But I suspect, they’re representing a major company, most likely beginning with the letter “D”, and that they’ll honor their bonus and royalty agreement within a reasonable period of time. Ask yourself how much you’re willing to risk, on the gamble that someone else will come along and pay those higher prices, based on what you know from your neighbors.
If you haven’t already done so, you might check out the forum on Fayette County leasing, right here on this site. There are some names of landmen and companies they represented that you may find interesting.
We in Fayette Co. have been going through all the landman offers since at least May. There were offers all over the board, from 175 to 1000 per acre and royalty from 20% to 25%. The flat out speculators, hoping to flip the lease, eventually left the area leaving some landowners holding a letter of intent that was never honored. Other landowners were left with bank drafts that have not been paid. Be careful and keep asking questions. Some neighbors consulted local attorneys in S’burg and Flatonia. You may know who they are. We used one in Houston who only deals in oil and gas mineral matters.
If you can’t find anything about the “company” on the internet, you might want to take that as a red flag.
Not to be a wet blanket, but technically speaking, I’ve heard that the fault or dividing line between the wet (profitable) and dry gas (currently unprofitable) portions of the Eagle Ford runs generally along the Fayette/Colorado County line or maybe a little to the east of that.
I’m just an anonymous nobody so don’t take this to the bank, but if you have property in Oakland or New Bielau, you may be able to get more by waiting some. If you’re in Borden or somewhere like that, maybe that’s a pretty good deal.
I was under the impression that dry gas was better. Is this not right? Why do they sell glycol units to dry gas before the sales point? Things may have changed since I was a service man for Smith Industries. Anybody know the answer to this?
steve potter said:
I was under the impression that dry gas was better. Is this not right? Why do they sell glycol units to dry gas before the sales point? Things may have changed since I was a service man for Smith Industries. Anybody know the answer to this?
It’s not so much a question of it being better, since I would argue that producing more domestic gas is better for the environment and better for the country. Rather, it’s a question of price vs. cost. Dry gas only gets $5/MCF at the market, whereas oil and liquid natural gas (condensate) go for $80/barrel. Moreover, the Dry gas window is deeper and therefore more expensive to drill. When Gas prices rise, it could become more economic.
thanks
where are you in the county?
Columbus Texas, 71 Bypass across from the fairgrounds.
I have 2 small tracts between the 71 bypass & Borden (home of the former milkman) & I'd take a $600 pa lease on them with a 20 royalty. My brother recently signed for $200 pa on a couple of tracts in the county around Bernado.
Colorado Co seems to mostly be an area of gas production & gas prices are low now. Of course no one can predict the future & it's your individual decision.
steve potter said:
Columbus Texas, 71 Bypass across from the fairgrounds.