My wife recently was contacted by Occ. Petroleum (Vintage) representative concerning the leasing of her oil and gas mineral rights. She owns a 40% share of the mineral rights on 160 acres in Section 23 which is on the south side of the South Mountain Oil field (Oak Ridge East Ventura County). She has been offered $25/acre/year for 5 years for her 64 net mineral acres along with 1/6 royalty.
Does that offer look reasonable for that area?
Thank you, Don
Hi Don,
All I can tell you is that I recently signed a lease with Oxy but I am in Section 15 - I have 100% interest in 220 acres and I received $50/acre and a 3/16th royalty (18.75%). They have not pulled permits yet.
Hope that helps?
Kate Sciacca said:
Hi Don,
All I can tell you is that I recently signed a lease with Oxy but I am in Section 15 - I have 100% interest in 220 acres and I received $50/acre and a 3/16th royalty (18.75%). They have not pulled permits yet.
Hope that helps?
Thanks Kate for reply.
It looks the larger the parcel size and quantity of shares of the mineral rights determines the lease amount. The property I referred to has had past lease agreements with Humble Oil and Standard Oil. However in each case the leases were terminated before the leasing period was up. The last lease agreement was with Conoco terminated in 1982 and they paid $30/net acre. Anyway I thought I would check around to see if I could get some idea of what a fair lease payment might be. Seems odd the lease price/acre would be less 30 years later.
Thanks again…I keep watching the forum to see if I get some other input.
Don Koepp
kate sciacca
Hi Don:
You are correct that $25 per acre is low. This is what the oil companies / landmen call a “throw-away” lease offer. They “throw” it out and hope that someone bites. I work mostly in Kern, Kings, and Fresno counties but Ventura is comparable to Kern. I would ask for $50 per acre, which would be reasonable. While your wife has only a 64 net acre interest, and you are correct that the larger the acreage the better negotiating power she has, $25 is unreasonable.
As for the 1/6th royalty, that’s fair. You could ask for 3/16ths and see if you get any movement. It does not hurt to negotiate some as long as you are being reasonable.
Hope this helps.
Jean M. Pledger
EHRLICH 6 PLEDGER LAW, LLP Info@EPLawyers.net
Thanks Jean for the information. I asked the land man representing Oxy why the price is so low, in comparison to Kate’s lease agreement with Oxy? He thought maybe Kate also owed the surface rights, thus they would pay more money due to the surface activity resulting from the lease activity. Not sure about that maybe Kate will jump in here and tell us.
I noted that Section 15 is just NW of Section 23. In fact the SE corner of Section 15 touches the NW corner of Section 23.
Thanks for help.
Don
Once again thanks.
Jean M. Pledger said:
Hi Don:
You are correct that $25 per acre is low. This is what the oil company’s / landmen call a “throw-away” lease offer. They “throw” it out and hope that someone bites. I work mostly in Kern, Kings, and Fresno counties but Ventura is comparable to Kern. I would ask for $50 per acre, which would be reasonable. While your wife has only a 64 net acre interest, and you are correct that the larger the acreage the better negotiating power she has, $25 is unreasonable.
As for the 1/6th royalty, that’s fair. You could ask for 3/16ths and see if you get any movement. It does not hurt to negotiate some as long as you are being reasonable.
Hope this helps.
Jean M. Pledger
EHRLICH PLEDGER LAW, LLP Info@EPLawyers.net
Hi Don,
No, I do not own the surface rights and really do not know who currently does. At one time they were owned by my dad’s second cousin, but I believe he sold them to Seneca Oil which I think was bought out by another oil company… not sure about that though.
Hope that helps?
kate
Sounds like a similar situation to my wife’s family’s ownership of the property. They bought the property in 1915 and lived on it until about 1920. Then sold it in 1940 and kept only half the mineral rights. We have photos from 1915 when they lived on the property. We were told that a lot of Italians lived in the area at that time. She has never been there, so I think we will go up and take a look around. Anyway, you have been very helpful, thanks again.
Don
Don:
Checking back in. Wanted to let you know that when you own minerals unless you explicitly waive your right to use the surface, you have the right to use the surface to explore your minerals. This is a right created in the law because if you did not have such right, absent an agreement by the surface owner, your minerals potentially could never be explored. I think that the landman was trying to be crafty with this reply. Your mineral acreage is valued on that basis alone. Thus, do not let the fact that you do not own the surface deter you from asking for a reasonable rental rate.
Good luck!
Hi Don and Kate-
My family situation sounds like yours. 120 Acres sold the land in the 1930s kept 1/2 mineral rights, Santa Paula area. For the first time in decades a title company has contacted us with what seems like a lowball offer. 500 per year lease and 1/6 royalty for 16.666 interest in the 120 Acres. (49.9999 percent interest in 120 Acres divided by three of us) Did your wife ever get a good offer? We are considering putting all in one person's name for better negotiating.
Don Koepp said:
Sounds like a similar situation to my wife families ownership of the property. They bought the property in 1915 and lived on until about 1920. Then sold it in 1940 and kept only 1/2 the mineral rights. We have photos from 1915 when they lived on the property. We were told that a lot of Italians lived in area at that time. She has never been there, so I think we go up and take a look around. Anyway you have been very helpful, thanks again.
Don
Kate Sciacca said:Hi Don,
No, I do not own the surface rights and really do not know who currently does. At one time they were owned by my dad's second cousin, but I believe he sold them to Seneca Oil which I think was bought out by another oil company... not sure about that though.
Hope that helps?
kate
Hi Wendy. I have not been checking in on the site lately. Here is the contact information I have on the Landman.
Tom McLaughlin
PPC Land Consultants
PO Box 1060
Dixon, CA 95620
Office: 707-678-1693
Cell: 530-219-4205
Fax: 707-678-2314
Thank you so much. Did she go with vintage?
Would any mineral owners be interested in selling their minerals?
Thanks