# Got offered a drilling lease for our mineral rights. Need some advice
**URL:** https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098
**Category:** Johnson County, WY
**Created:** [February 23, 2019, 2:16pm UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098 "2019-02-23T14:16:35Z")
**Posts on this page:** 8
**Page:** 1
### Author:  [@jamesonc](https://www.mineralrightsforum.com/u/jamesonc)
#### Post date: [February 23, 2019, 2:16pm UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098/1 "2019-02-23T14:16:35Z")
Hey guys, I’m totally new to this kind of stuff. My wife and I inherited some mineral rights in Johnson County. It’s 1.3333 acres at Township 48 North, Range 50 West. We were offered from Seven Sisters Oil and Gas a 5-year lease with an option to extend 3 more years for 400.00 dollars initial and then 16% net proceeds. Any idea what the going rate is and what should I counter with if it’s not a great deal?
Thanks everyone!
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### Author:  [@jamesonc](https://www.mineralrightsforum.com/u/jamesonc)
#### Post date: [February 23, 2019, 2:22pm UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098/2 "2019-02-23T14:22:31Z")
It’s Section 24 and 25.
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### Author:  [@Cat\_Dancer](https://www.mineralrightsforum.com/u/Cat_Dancer)
#### Post date: [February 23, 2019, 4:07pm UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098/3 "2019-02-23T16:07:10Z")
My lowest offer is 18% 500 PMA.
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### Author:  [@CDGooD](https://www.mineralrightsforum.com/u/CDGooD)
#### Post date: [February 24, 2019, 7:02am UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098/4 "2019-02-24T07:02:12Z")
I would very much caution against granting an option to extend clause in your lease. This allows the company to extend your lease for an additional 3 more years if they don’t drill within the first 5 years for the exact same amount of money per acre that they paid you upon signing the lease in the first place. You don’t want to lock yourself into a per acre rate you negotiated 5 years earlier; the going rate could be much higher and you will want the opportunity to negotiate a new lease.
Plus if I lease to a company and they can’t get something done in the first 5-year primary term, I probably want to be looking for a more active lessee next time I sign a lease.
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### Author:  [@CDGooD](https://www.mineralrightsforum.com/u/CDGooD)
#### Post date: [February 24, 2019, 7:07am UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098/5 "2019-02-24T07:07:02Z")
> [@CDGooD](#):
>
> Plus if I lease to a company and they can’t get something done in the first 5 year primary term I probably want to be looking for a more active lessee next time I sign a lease. Hope the above makes sense, if not ask questions and I will try to answer them. Just generally a bad idea to grant an option to extend clause in the lease.
This is also helpful to read [Oil and Gas Leasing – Top 10 Things To Do — MineralWise](https://www.mineralweb.com/owners-guide/lease-proposals/oil-and-gas-leasing-top-10-things-to-do/)
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### Author:  [@kbwalker](https://www.mineralrightsforum.com/u/kbwalker)
#### Post date: [April 17, 2019, 2:02pm UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098/6 "2019-04-17T14:02:15Z")
I have a couple of questions:
1. Did you take the offer?
2. Where is Township 48 North, Range 50 West? I can’t find it on the map.
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### Author:  [@jamesonc](https://www.mineralrightsforum.com/u/jamesonc)
#### Post date: [April 17, 2019, 3:38pm UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098/7 "2019-04-17T15:38:09Z")
We negotiated on the royalty rate. The landman wasn’t budging on anything else, unfortunately.
So we ended up accepting a royalty rate of 18.5%, $400.00 upfront payment to lease the land for 5 years and a 3-year optional extension. Honestly, we didn’t have much leverage because the area doesn’t have many wells yet. We’ll see what happens.
The location of the land is on the eastern border of Johnson County in the center. Looks like energy companies are leasing land on the eastern edge of Johnson County and working their way in.
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### Author:  [@Kenny\_DuBose](https://www.mineralrightsforum.com/u/Kenny_DuBose)
#### Post date: [April 17, 2019, 3:50pm UTC](https://www.mineralrightsforum.com/t/got-offered-a-drilling-lease-for-our-mineral-rights-need-some-advice/42098/8 "2019-04-17T15:50:38Z")