Converse County, WY, Oil & Gas Lease Extension Offer

Oil and Gas Leasing Help
#1

I've been offered a 5-year extension of an original 5-year Oil & Gas lease I signed in 2008 on my mineral rights in Converse County, WY: Township 33 North, Range 68 West, Sections 25 & 26. The offer is for $175 per acre bonus payment and 15% royalty for an additional 5 years.

Given the recent activity in Converse County, (e.g. the recent record bid on federal lands in Converse County), the bonus payment offer seems low. Is there anyone who has been offered payment for leasing their rights in the area recently that can give me guidance whether to accept or reject the offer, or suggest a reasonable counter offer?

Thanks.

#2

we have mineral rights in converse county. have been offered outright sale by Texas company, How do we know that rates are reasonable and if want to sell. thanks

Ted Preston said:

John,

I’m familiar with the lease rates being offered in other parts of the Niobrara play in Wyoming, and the rates that were paid for BLM and state leases recently in Converse county. Let’s talk. I’ll shoot you a friend request.

Ted
#3

Hi, John, I am interested in the company you are dealing with. My parents own mineral rights in TWP 31, Range 67 West, Section 4. We are close and would like to offer them this land.

Any help would be greatly appreciated.

Tom

#4

Tom -

The company I signed the extension with was Hoover & Stacy, Inc., Agent for Kerr-McGee Oil & Gas Onshore, LP.

Their address is: P.O. Box 2328, Cheyenne, WY 82003. The Hoover & Stacy landman who made me the offer was Ron Stanker. He gave me his phone number as (307) 683-3270.

Good luck.

John

#5

I'm a bit further north (40N 73w) and have just been offered $100/acre bonus to re-lease for 5 years at 14%. I know this is low, but I'm not sure how low. Anyone else in the area getting higher bonuses?

#6

John,

Would you mind sharing how much bonus and royalty you got on your minerals?

Yours,

Wes Luke

#7

Wes,

$175/acre, 15% royalty, for a fully-paid up 5-year lease extension effective 3/8/11.

John

Wes Luke said:

John,

Would you mind sharing how much bonus and royalty you got on your minerals?

Yours,

Wes Luke

#8

Personally, I would not agree to a 5 year lease, much less a 5 year extension. This gives a company a decade to drill or not drill. If there is good production in the area, you should consider letting the lease expire and renegotiate a new lease with higher bonus and royalty in 2013. More than one company may be interested then and your potential for a higher bonus and royalty could be much better. I don't believe anyone in Texas would consider less than a 20% royalty. However, I do not know what the market is in your area of Wyoming. Just food for thought...

#9

Dear 6th Generation Texan:

You may be right -- "Haste makes waste." On the other hand -- "He who hesitates is lost" and "A bird (or bonus payment) in the hand is worth two in the bush"! Because nearly 25 years had elapsed since I last signed a lease on those mineral rights, prudence seemed to be on the side of accepting what seemed to be a reasonable offer.

In any event, since the existing lease was near the end of its term, the extension only gives the lessee five more years to drill, not ten.

As for the royalties Texans would consider, everything in Texas is bigger, isn't it?

Thanks for your thoughts.

John (4th Generation Mineral Rights Lessor) Arimond

6th Generation Texan said:

Personally, I would not agree to a 5 year lease, much less a 5 year extension. This gives a company a decade to drill or not drill. If there is good production in the area, you should consider letting the lease expire and renegotiate a new lease with higher bonus and royalty in 2013. More than one company may be interested then and your potential for a higher bonus and royalty could be much better. I don't believe anyone in Texas would consider less than a 20% royalty. However, I do not know what the market is in your area of Wyoming. Just food for thought...

#10

Mr. Arimond, it might be that in Texas we have done more shoulder rubbing with them (oil and gas professionals), and frequently have family in the business. I have a couple near relations that are.

#11