I have had an offer from a company to top lease some minerals that I own in Divide County, T160, R98, Sec25. I felt like their offer was low and am wondering what the going rate in that area is. Also, what if I lease to them and then the other company drills before the initial lease expires so then the top lease I guess is void. Will I be expected to pay back the money for the top lease or do they just lose their money?
Julia, the big trick would be getting them to pay you at all before the original lease expired. These toplease offers usually like to schedule payment after the original lease expires or they will just be late paying so that if a well is drilled under the original lease, they just don't pay you. If by some miracle you did make them pay you part up front by check and not draft. You would not have to return the money, it would be yours to keep.
Julia, if you search toplease on this site you will find that in many peoples opinion that topleasing is often not in the mineral owners favor. Besides the problem of getting paid, there is the matter that you are not in your strongest negotiating position. The strongest position is unleased after your current lease expires.
Julia, I haven't heard of much in the $5,000 range in Divide and I think that would be optimistic. I think your area could be commercially profitable but marginally so. I think you could ask $1,500 to 2,000 bonus and 3/16 royalty and it's always smart to start negotiations higher.
Julia:
I have experienced the top leasing game and it is my opinion that you will be much better off if you allow the minerals to expire and let these companies come to you. Your negotiating power is much better but keep tabs on what wells are being drilled near your area and learn their production figures. One very good well in the proximity of your mineral area will work wonders in your negotiating power.
PT Brown and r w,
you say someone is paying or has paid $5000 per acre to top lease in Divide, what township and range were these offers in and just who is it you both say is or did offer this amount?
Joe, I didn't want to directly contradict PT and say that there is no $5,000 in Divide, that si why I said I had not heard of that amount and that I thought it was optimistic. If I knew someone who was paying that much I would be shouting it.
When you said you hadn't heard of much I wasn't certain, I was going to say I leased mine too low but we'll wait and hear from PT Brown as to who is paying $5000 per acre as that is a little too incredible and the leasing company may lose their shirt paying that.
My offer was $1000 which I thought was a little low.
Julia,
The risk and opportunity cost of top leasing are huge to the mineral owner and not worth the amount of bonus you may get if you get any. RW and Charles M. really know what they are about and I won't allow my clients to top lease. There are too many good alternatives to the mineral owner if she is patient and thoughtful.
There is a well #21193 ,not too far from you, completed in march of 2012.
It has produced 20,000 so far thru Dec 2012.
it is two miles to the east.
At $5000 per acre to top lease in Divide a person would be a total fool not to with reputable company.
Julia,
We have 20 acres in a well at 160-98-22. Leased last year in May @ 900 and 19%. They started producing in October 2012 and just got a Division Order. Baytex is the company. I'm guessing you might have Continental or Kodiak knocking on the door. They seem to be on that side of the road (42) VS our side. Good luck.
Thanks, Mike, for the information. It is Continental and they are offering $1000 and 20% I think.
mike orsborn said:
Julia,
We have 20 acres in a well at 160-98-22. Leased last year in May @ 900 and 19%. They started producing in October 2012 and just got a Division Order. Baytex is the company. I'm guessing you might have Continental or Kodiak knocking on the door. They seem to be on that side of the road (42) VS our side. Good luck.
P T Brown says they are paying $5000 per acre, I'd contact him to find out who is paying the $5000 per acre and lease to them if they will go the 20% which is pretty much average royalty. I wouldn't lease for $1000 when he says they'll pay $5000 per acre.