Current offers to lease minerals in Gaines County

I received an offer from CGS Operating, LLC to lease my portion of Labors 3&4, League 297, Reagan County School Lands located in Gaines County. I received an offer of $450/acre for 14.760 net mineral acres on 354 gross acres and 20% royalty. I have other minerals in Dawson and Martin Counties but I am unfamiliar with the level of activity and rates in this area of Gaines County. Does someone have some information that they could share with me?

I think you got the same offer as my brother, me and my sister and probably our multiple relatives who each own small bits of mineral rights in the general area. If someone can give you a link to the area you are talking about you would be able to see if there are active wells, dry wells, capped wells, etc. There hasn’t been much activity where ours is located, so I signed my lease. The only thing I did not like was that I thought it had a 2 year option on it. After I mailed it back, I noticed that it had a 3 year option. It looks like most knowledgeable people have been advising against options, esp 3 year options, so you might double check the wording. Good luck.

Thank you for the information. My relatives and I have not made up our mind regarding the lease agreement. I am having an attorney look at the agreement because it contains numerous sections that are too favorable to the lessee in my opinion. I have looked at maps and the closest producing well is a mile east of our property. It began producing in July of 2017 and has produced almost 98,000 barrels through July 2019. Production has fallen way off. There are dry holes and producing wells within two miles of the property and one permitted well which has not been drilled about one half mile from the property. I had caught the three year extension also and I believe the company is willing to accept two years. I appreciate your feedback.

Hi all - I received an offer from CGS as well - Labor 25, League 291 They wanted 3 yr/$450 NMA, 3 yr option, 20% royalty. We countered with 3yr/$550, 2 yr option, 25% (they countered with 22.5%). We will probably move forward with drafting agreements for review. Just wondering if there is much activity?

There seems to have been a considerable amount of leasing over the last few years by Oxy, CH4 Energy, various San Andres players, and now EOG, but there does not seem to have been a commensurate level of drilling. I believe there were three active rigs in Gaines county as of Friday. See the “Oxy leasing in Gaines county” thread in this forum.