I am hoping you can help. My daughter-in-law inherited land in King's County that was left to her now deceased mother. It is just over 100 acres in sections 26 and 35. As I understand from her father, my DIL's has mineral rights only. Her father thinks the land was sold at some point.
She has been approached by Lone Star to lease the property. They have offered her $75 per acre for the first five years and after that she would receive $75 per acre annually. They also offered her about 1/6 royalties (17.5%). There is also something about taking it into a 20-year lease at some point.
We are across the country in Michigan and have no idea whether there has ever been drilling on this land. There could be wells there already, for all we know. So we have some questions:
1. Does anyone know if the land in sections 26 and 35 has been profitable?
2. Is this 5-year lease at $75 an acre a decent deal?
3. Is the 17.5% royalty sufficient for this area?
4. The lease talks about paying the royalty when the company gets saleable product, or
something like that. Who decides what is saleable?
5. Can this company be trusted? They went through a LOT to find my DIL and her
grandmother to sort out who had rights to the property after her grandfather died.
Makes me a little leery to just see her jump at the first offer.
6. Is the 20-year lease clause reasonable?
Anything you can let me know that I can pass on to her would be appreciated!