Hi, I have a question about a company who has offered me a 5 year term providing a 15 percent royalty (3/20ths) . It is on 14.53215 net mineral acres. $350 bonus consideration.
I’m new to this and need to know if this is a good offer.
Can someone please help me understand what this means?
Thank you
We cannot help you without a location. You need to post your question in the state and county where your minerals are located and give a section, township and range or abstract. The royalty and bonus are only part of the offer. The wording of the clauses in the lease is much more important.
Thank you for your response. It is Love County Oklahoma Section 4-8S-3E. The company is offering the following options for an oil or gas lease for 14.53125 net mineral acres. They are offering either a $350 bonus consideration per net mineral acre for a 5 year term providing 15 Percent royalty (3/20ths) or a $450 bonus consideration per net mineral acre for a 5 year term providing an 12.50 percent royalty (1/8th). And to put a check mark by whatever my decision is. That is basically all the letter states .
Again I am new to all of this. The mineral rights were inherited from my parents after they passed.
That is a courtesy letter and has no standing in my opinion. Do not sign it-just in case. You can call them back. Make sure that you have your probate filed in Love County courthouse if you inherited.
Trailhead was giving 25% leases withing the last two years. Most of us would want the higher royalty. Trailhead has the other horizontal wells in the nearby sections.
I never go for five years. Too much can happen in that time frame. I would ask them for a 3/16ths (18.75%), 1/5th (20%) and 1/4 (25%) option and tell them that you know there are active 20% leases right now. Ask for three years only with no option. Ask for a copy of the draft lease and then get a good oil and gas attorney to review it because it will not be in your favor and will need edits. The clauses are very important and can hold for your family for decades. Much more important than the amount of bonus if the wells are productive.