I am fortunate to have several properties close to a S 1, T25S, R35E property that I recently leased to Franklin Mountain for 4K /acre and 1/4 royalty. I now have lease offer on 36+ A from Ameredev who has put a lot of money on adjoining property and seem to have some reasonable wells and permits to drill many more… I may be using the wrong yardstick but it seems that the bottom reasonable lease would be in excess of $4K/acre since the geology and success of area wells appears to give Ameredev strong incentive for further development. During the crazy 2017 months when a lot of folk were throwing a lot of money at NM minerals I leased these acres for $7.5K/A , a lease that has expired. . I want to lease while not throwing away the opportunity for a nice windfall – but I don’t want to get into a pooling situation. Is a $7.5K / A a reasonable goal in today’s market?
$7.5k doesn’t seem unreasonable to me at all for 25 36 Sec 6 or whatever we are discussing. But I could easily see a situation where an operator in NM can lowball everyone or else hit them in the head with a compulsory pooling hammer. Which you seem to be aware of. I didn’t dig into it very far, but it looks like Ameredev already has pooling orders for most units, so…ask for whatever you want but they may tell you that the offer is the offer and then smack you with four AFEs for $2.25M net to prove their point.
So…yeah…sign a lease.
Good news is that your windfall will be on the royalty side if Ameredev goes and knocks out 8+ wells per unit. That will dwarf a $2-3k/NMA bonus delta. So definitely 25% royalty.
Thank you for your comments — ADS
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