Section 21 mineral rights. We have received an offer from a landman to lease our mineral rights in Section 21 in Custer County. Options are 1/8, 3/16, and 1/4 royalty. Does anyone have any recent experience or comps in lease terms at or near this area? Thank you so much in advance for any insight you can provide.
You must give the complete section, township and range. There are many section 21s in Custer county.
I apologize, the section, township, and range is 21-13N-16W.
Lease bonus amounts are not public information. The closest you can come is a pooling order in a contiguous section in the last year to be a guide. You are in luck since there is one close by in the last year. Section 17 was pooled for $1000 @ 1/8th, $800 @ 3/16ths, $575 @ 1/5th and $0 for 1/4.
I prefer the highest royalty (even if there is no bonus money) as the bonus is insignificant compared to many years of royalties at a higher bonus. Consider more than one well as a possibility and the higher royalty makes a lot of sense.
Since there is a well permitted catty corner to you in 8/17, I suspect that you may get more than one offer. You may be able to lease at 1/4th and get some bonus money. Mewbourne has a rig running in similar horizontal wells just a few miles away.
If you have never leased before, get a good oil and gas attorney to review the draft lease as it is almost never in an mineral owner’s favor.