How much dose finding oil effect price?

Lets say you do your homework and you find out a drilling company finds oil one section over from your land. Then that company wants to lease your land. How dose that effect your asking price?

If they get a good well in the next section, they either meet my reasonable demands or they force pool me and I take much more, or....they can walk away and leave all that beautiful oil and the money it sells for behind. Remember, we are talking about mechanical failure being the only risk, and they are doing the drilling. If they drill a bad well they can drill another one. If they claimed that there is still risk, I would say ok, I'll accept 15% royalty until payout and 30% after that, that way I'm sharing the risk of the bad well. Risk it is too, if you lease and they get a well that hardly pays anything and hold your acres by production with that well for 30 years, you have lost bigtime. Anyone who says leasing is safe isn't telling the whole story.


It materially effects your negotiating power. If you focus on bonus, you are picking up pennies and ignoring the dollars it will cost you in lease or farmout terms. The probability of getting production payments long term will have gone up so protect that increase in potential. RW's example illustrates one way to insure the upside goes to you.

By keeping my self inform ( Finding out who and where drilling is taking place ) Gives me a edge when they come knocking . The bonus by all accounts would be higher but how higher if at 150 now? Big help with asking more at payout THANKS