Help evaluating lease offer

I have minerals on 500 acres in Grimes Co. TX in six tracks in the James Pankey survey, abstract 47. I have an offer of $12000 bonus with 1/5 royalty and a 3 yr primary term. I’d like to know what other leases are going for in the area and thoughts on how much negotiating room I have.


Do you own all the minerals? Is the bonus 12k for all 500 acres? Would like to see them offer 25% royalty, but not familiar with area.

Yes, I own all the minerals. Yes, the 12k is for the 500 acres.

Way too low. But you have to start somewhere.

Buddy Cotten

So negotiate "up." It's easier to negotiate up when you have what they want. Check on what others in your area are asking or consult with an O&G attorney, specializing in lease negotiations.

I've been negotiating my O&G lease since September, 2014. And, today, I sent the landman my final revision. They started out offering $175 and 3/16%. Today, it's $300 and 1/5%. But, most of the negotiating was for a strict surface use agreement.

Gotta watch out for those lessee dudes. Their leases are very onerous.

Good luck,


MD America Energy? They have quite a few leases in the section from the end of last year to this year. For the bonus I do not know. I wouldn't sign anything less than 25%. With that there are more lease provisions that need to be negotiated. Bonus and royalty are just the initial hurdles. Gross production, no expenses, tax reimbursement, etc. Do just put those in there though. One word can make all of the provisions useless. Get with someone who knows what they are doing.

Another thing to note. Devon sold their interests in Abs. 47 to MD America last year. It might be best to negotiate your terms with a favored nations clause.

Even $120,000 for a 500 acre lease would be way to low! I suggest that you hire an oil and gas attorney or mineral manager to represent you. James Ray Trant from Iola recently leased his mineral interest in 611.10 minerals in the James Pankey Survey to MD America. You might contact him and ask how much his family leased for, if he will share the information. His name should be in the phone book.