Gaines County Labor 5&6, League 295, A-815 Mineral Right Lease


I have received a lease offer from CGS Operating LLC for this property: - 3 year primary term at $550 NMA - 23% Royalty - 2 year option to extend at $550 NMA

I cannot find this property on the RRC map, I’m not sure how the numbering system works. What is the number in the top left of the boxes? I assumed the league, but seems many of the same numbers appear multiple times. Then I see the A-X numbers in the bottom left. But I cannot find one that shows 295 and A-815.

Do these terms seem fair? If anyone could provide a snapshot of other interest around ours and what royalty and NMA bonus they received, that would be excellent.

Thank you

This link will open to a well on League 295. Use the magnification bar on the left to zoom out a bit. On the bonus and royalty, I would say a lot depends on whether you can afford to lose the deal. Will you be negotiating from a position of power or relative weakness? In another thread, a lady with minerals in Dawson county wrote that a CGS landman said that his firm was helping lease 220,000 acres. That is a lot of land. If you don’t have hundreds of acres of minerals, a big company might just lease a chunk of your League and move on leaving you hanging for several years. If there are immediate plans to drill, you are in a better position. But how can you know what the intentions are if you don’t even know the name of the oil company for whom the land is being leased? Search this forum for why it is important to have an oil and gas attorney or some other expert assist you with your lease language. A 23% lease with language somewhat favorable to you might pay more than a lease prepared by the company with a 25% royalty. I think $500+/- is probably typical north or south of Seminole for the last few years, but southeast of Seminole may be a different story and command higher bonuses. Perhaps others will offer their two cents, too.

Thanks for the link and the reply. We have family friends that have been in the O&G business for years, one is the president of a company and I reviewed it with him today. His position was essentially that this CGS company is NOT a driller and is just looking to get the lease in hopes that a driller will come within the 3/5 year term and they can then flip the lease for more money. That makes sense to me…If I search CGS Operating LLC it shows an office in the city I live and the address is the same as Adams & Coker attorneys I’m not sure how this outfit would have the money to lease 220,000 acres, but who knows. None of us need the money in any way shape or form now, it would just be a few thousand dollars thrown into our investment accounts and would not change our life one way or another. So I somewhat feel we should not worry about the lease and then if a driller actually comes and wants to drill, we could get paid more and get the royalty in a shorter time frame. I may be off base with this, just thinking out loud a bit. Thanks for the help.

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You’re welcome. CGS is most likely just doing the land work for an oil company. If you look at this thread, you will see that Oxy has used at least three land companies to acquire leases in Gaines county. In a now deleted comment in a Dawson county thread, someone wrote the following about CGS and its representative, (excerpt) “…the company he represents are very large and looking to secure 220,000 acres in Dawson and another country… I am assuming from reading other posts that the other county maybe Gaines.” If you go to a search will reveal CGS has recorded leases in Gaines county.

Yes I did see that post referencing the 220,000 acres. I can’t get texasfile to work, I created an account but anytime I try to login to search it says the account is inactive. I did also see from other threads that there were bonuses being paid between $4,000-$10,000 NMA by some companies, but I assume that is not what ours is worth.

I feel like a large oil company would have their own leasing extension or be using a company with a reputable website to get leases, but that does not seem to be the case here. Maybe that’s just how it goes though…

As stated, we don’t need the money and I’m not excited about dealing with getting the lease signed, having attorneys review it, etc. The trusted family friend said the lease they provided us was not a standard Texas lease and looked to be written in a way that definitely benefits the lessor vs. the lessee so we would need to have an attorney review, etc. However, if they do actually plan to drill on our land and we don’t lease, we would be missing out on bonus + royalties.

I’m really not sure how to best proceed from here.

Unless you sell, without leasing and/or production, the minerals are an unexploited, essentially worthless, asset, imo. I like the motto “Always be leasing”. Whether or not you would receive any royalties after a well’s payout is a complex matter, and, firstly, the well would have to pay out. I was very impressed when I contacted forum advertiser Hilltop Royalties for a free evaluation. I have also recently become aware of the website leaseminerals. I have no financial interest in either of the above companies, and no experience with the latter. I don’t believe the land companies NRG Energy Resources, Tacoma Energy, or Sterling Land have websites, but all have leased for Oxy in Gaines county. I have no knowledge of anyone receiving $4000-$10,000/NMA bonuses in Gaines county, but who knows. If you choose not to lease and wait, you may indeed make up and exceed what you would get from leasing today. Or maybe not. Today’s hot prospect may cool–or go polar-- leaving you with the loss. Since you have super-adequate resources, it sounds like a coin toss. An account is not need to search courthousedirect. I did not think one was needed for texasfile.

I have contacted Hilltop for a free evaluation so thank you for providing that resource.

Anytime I click the Search button on TexasFile it just redirects me to the login page and the email and password I set up will not work…but I think the information I would need from there is that CGS is leasing a lot of acreage in Gaines county. My family friend pulled O&G Completions, permits, and YTD leases for CGS Operating and shows 131 different ones this year. They have a lot of acreage under lease it appears…makes me lean towards just doing it.

You’re welcome. My experience was that it took a day or two for Hilltop to reply. There are 152 recorded entries for CGS Operating in Gaines county on courthousedirect. If CGS has an operator number in Texas, I could not find it. I suspect it is a land leasing company. If you are prepared to sign their lease without amending it, it might not hurt to ask if they would give you 25%. I would wait until I heard back from Hilltop. Please keep us posted as to what you learn and decide to do.

A few more questions here: Our family has 90 acres of the 359 acres potentially being leased. I believe if they drill a well anywhere within those 359 acres, we get our percentage of the royalty that we are due, correct? It is not just a specific 90 acres of the 359 that would need to be drilled on.

Also, an interesting proposal from a family member. We have the “executive rights” on the minerals and the other piece is owned by the Amon G Carter foundation I believe. What if we ask for more of the bonus money be paid to us since without us, the other owner gets nothing. This would at least give them a chance at a royalty if drilling occurred?

$550 * 359 = $197,450. If we took $2,000 per acre on our 90 acres that would give us $180,000 and the foundation $17,450 and a chance at royalties. Is anything like this ever done?


As a holder of executive rights, you have a fiduciary duty to the other party. You have a legal obligation to ensure equal and fair treatment. It is a serious breach of that fiduciary duty to suggest that the other owner be treated differently and that you benefit at his expense. There is a case where the holder of executive rights got all the bonus and had to share the royalty. The holder asked and got a higher bonus rate in exchange for a lower royalty, thereby harming the other owner who sued for and collected damages. There are serious legal consequences for breaching your fiduciary duty. Think of a trustee who is proposing to take advantage of the trust beneficiary.

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Just wanted to follow-up with everyone here. We have proceeded with negotiations and our current lease terms are below. We will likely seek a local O&G attorney for final review (what would be a reasonable fee for this?)

3 year primary term at $600 NMA 2 year option at $550 NMA 23% royalty

$300-$400, maybe. Seems like a lot could depend on the location of the attorney’s practice.

My family owns some mineral rights in this area and spoke with an attorney who basically told me that there is nothing going on out here and that 550 an acre is good for this area and that I should be glad it is getting leased.

My cousin who owns in the same land told me that CGS is leasing for EOG Resources in Gaines County.