Conoco Mineral Lease Extension

Hi. We live in township 4S, 64W near Watkins. Conoco has hired Centex to negotiate a mineral lease extension. Does anyone know what the going rate is per mineral acre? They are telling us they won’t pay more than 750 an acre and the gentleman was acting very pushy. Any info or advice would be appreciated!

What they want to pay now or willing to pay later are two entirely different scenarios. The best contracts are when mineral owners are very patient. I am not a huge fan of landsmen, but they are only doing their job which is to negotiate the lowest bonus & royalty. Remember back in 2010 when GFL's first offers were 25$ per acre for five yrs with a 5yr kicker at 150% with 1/8 royalty. Many mineral owners were mad & embarrassed for not paying attention and tying up their minerals for 10 yrs. In late 2010 many owners received $1500 per acre , 1/5 royalty, 3 yr lease with 125% kicker for 2yrs. Then in 2011 bonus reached a high of $6500 for state land which was grossly overpaid in my opinion.

In May 2011 we received $2500 per acre, 4yr with pugh clause, 2yr kicker at 125% and 1/5 royalty. We don't expect Conoco to exercise the option come May.

Conoco's production in the early stages was not very impressive but the last year they have some really good results:

Zukowski sec 17 4S 64W 16,066 bbls Oct 2013 but has declined to 3,381 Aug 2014

Bomhoff sec 9 4S 64W 21,091 bbls May 2014 (very nice)

Tebo 4 sec 4 5S 64W 12,850 bbls May 2014, 15,199 bbls June 2014, 11,067 bbls July 2014

Their has been a few earlier wells which may never be paid for:

Tebo 3 (one section east of Tebo 4) 3,191 bbls July 2013 and has declined to 679 bbls. Aug 2014

It is hard to determine the bonus value, but $750 is very low. If your minerals are in one of the sweet spots the price is higher, if Conoco has applied for drilling permits in your section would also increase the value, is there productive wells next door? Not knowing your circumstances I will give you my 1 cent of knowledge. Remember location is important.

Bonus; $1300 to $2500

Royalty; No less than 1/5

3 yr lease with NO Option (options are useless to mineral owner)

You may also try for a maximum 6 month of flaring and after that you want paid.

Be patient and let this mature, you own the minerals that Conoco wants. They love low hanging fruit.

Good Luck & let us know the outcome!!!