Contacted by new company regarding mineral rights lease in Gaines Cty

Hi, we have mineral rights on all of Labor 20 and 21 League 291, Lynn CSL A-966 Gaines County Texas. We signed a 5 year lease in 2011 with one company for $250.00/net mineral acre bonus and royalty of 20%. Since we haven’t heard from that company in a while, I assume that the lease is expired. I recently received phone calls asking if we wanted to lease the mineral rights. Since my brother knows the industry better than I do and used to live in the area, I am waiting to see what he finds out about the company that called. In the meantime, I cannot find exactly where this area is on the map that I have and would like to know if there is any activity in the area. Assuming that we have a legitimate company wanting the lease, what is a suggested ballpark figure/acre we might negotiate for considering the area? Should we perhaps ask for 25% royalties, or is that inappropriate? thanks

It’s never inappropriate to ask, and I certainly would. Good luck!

This link will open to the Texas RRC map viewer on a dry hole drilled on Labor 19, League 291 in the year 1981. Your parcels are just to the east. My thought would be to ask for the moon but take $500/acre. Others may have a more informed opinion as to bonus. Get a 25% royalty if possible. 22.5% might be a compromise for a slightly higher bonus. Mind sharing the name of the company which has approached you about leasing? What will they be targeting?

I live in Seminole, county seat of Gaines County. Your interest is probably in the Southeast part of Gaines County, south of U.S. Highway 180. That is where most of the Labor land is located. There is activity in that part of the county. The wells are deep. Depending on whether or not you have surface and minerals or just minerals I would not consider anything more than 3 years 25% royalty and a minimum of $750 per acre. All of the leases I am seeing these days have very broad powers to the oil company. You have the right to add conditions or riders to supersede the terms of the lease. Such as only allow a lease to be to a certain depth. that allows the potential to lease other pays (production levels) You might want to consult an attorney in the area about other riders


blegal, It sounds like you are very up to date on the oil business in Gaines county. Do you have any information on Oxy’s leasing of tens of thousands of acres scattered across half of the county? Has the acquisition of Anadarko caused Oxy to cool its heels on what might be a new type of Clearfork injection prospect?

Thank you to all that answered my questions - special thanks to AJ11 for the link to the maps. I was able to scroll around and find areas with dry wells, capped wells, etc. in relation to the areas. And a big thanks to blegal for the advice and information. As far as I know, we do not own the land, just the mineral rights. I think one of my distant relatives owned the land once, then sold it but kept the mineral rights. My brother said something to the effect that a lot of mineral rights are being leased by companies who are not really for looking for oil or gas or for drilling, but rather to try to keep other companies from drilling or searching. I don’t know the name of the company that has been calling me. I am going to call them back to see what they have to say.
I will post what I find out. Thanks again!

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eggsinspace, It is not uncommon for a big company to use land companies to acquire leases. Two or so years ago in Gaines county, Oxy was using at least three and likely more. A land company’s name will often sound as if it is an oil company. ****** Exploration; ******* Energy, etc. You can ask the company that has been calling you if they are leasing for a larger company. I would recommend you ask if they are leasing for EOG Resources. I think it is extremely unlikely that the company that called you is trying to prevent another company from searching for oil.

Oxy has slowed down some; but don’t know if it is Anadarko purchase or simply the end of the year slow down. It is common for oil companies to put projects on hold during the last quarter because of budgets. They will seem to be backing out of deals but they will be back after the first of the year when they get the new budgets

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Thank you very much. The company calling me was definitely not the oil company.

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Thank you for sharing your report from Gaines county.

The paperwork said CGS Operating, LLC on it. We have a very small percentage of the mineral rights, so we just signed it and sent it back into the land leasing company. Thank you all for your help!

I chanced upon this interesting paragraph and thought I’d share it here: “Due to these historically low production levels, Apache was able to secure a lot of acreage at a very low price. The company quietly acquired leases through third-party landmen. After the paperwork was signed, the land companies assigned the leases to Apache. This process allowed them to scoop up 320,000 net acres at an average of $1,300 per net acre without prematurely alerting anyone to their find through a frenzy of leasing activity.”

Pretty sure it was for EOG.

CGS Operating, LLC has permitted two wells in Gaines county with completion depths of 11,500’