The lease I was given to sign is offering the following:
5-year lease with option to extend
$25 per net mineral acre paid yearly in advance
1/6 royalty
Property near Wasco, CA. in Kern County.
Thank you for your input.
Janet
Janet:
Unfortuanately, I am not familiar with the Kern County area in Ca. but I can give you a pointer or two. First, take your time and do some research of your mineral area. Obtain information about any nearby wells and their production rates. Most likely, your minerals are located in an area which has not be de-risked based on the small bonus being offered. Just remember, these companies know more about what's possibly under the surface than you. Second, I would not tie my minerals up in a lease for 5 years as this will only prolong the possibility of being drilled on. I would have second thoughts on granting a lease extension. Say four years down the road, the area becomes "hot" and others are leasing for several hundred dollars per acre but you will be tied up with this small amount of bonus money. Third, if the area becomes active, the % royalty will increase greatly. I have seen this scenerio happen in Bakken area of North Dakota. Finally, my advice would be to do your homework in regards to searching the area, learn what any seismic surveys have concluded and take your time. You may elect not to consider leasing at the present time and wait to see what occurs in the future. Again, it only takes one very successful well near your area to bring your mineral values much higher. Hope this information helps.
Charles,
Thank you for your input. It helps.
Janet:
I live and work in Kern County. The five year lease is standard here in California. In fact, thre is likely a clause allowing an additional 5 year option. $25 per net mineral acre is what the landmen call a "throw-away" offer, as land has not been leased for such a low amount for many, many years. Wasco is going for anywhere from $65 to $85 per net mineral acre or more. 1/6th is fairly standard now, but can definitely be negotiated if you hold a significant interest.
Good luck!
Jean,
Thank you so much! Every bit of info helps.
Jean M. Pledger said:
Janet:
I live and work in Kern County. The five year lease is standard here in California. In fact, thre is likely a clause allowing an additional 5 year option. $25 per net mineral acre is what the landmen call a "throw-away" offer, as land has not been leased for such a low amount for many, many years. Wasco is going for anywhere from $65 to $85 per net mineral acre or more. 1/6th is fairly standard now, but can definitely be negotiated if you hold a significant interest.
Good luck!