Hi! I was offered $10K per net acre with a 25% royalty for mineral interests in Lea County, NM
What is the best way to evaluate the lease deal?
-There are no wells in the immediate area. There is production to the west.
I executed a lease in 2017 for the same area with a different operator that never drilled.
There are no wells permitted or pending permits in the section on OCD website.
Here is location info: Township 23 South, Range 35 East, Section 14: SW/4SW/4, Section 15: N/2SE/4, SE/4SE/4 , Section 22: NE/4NE/4 & Section 23: NW/4NE/4, N/2NW/4.
Does anyone have any ideas on what else I should look at to see if this is a good deal or not? Any insights are helpful!
I mean the best way to evaluate it is to offer it to a bunch of folks to lease and see where the market is. But that is easier said than done. I don’t even think it is kosher to list folks who might lease it.
You could go look at SLO and BLM lease sales and see bonus amounts. The state leases should at least be 25% royalty but longer terms so should expect less. Should expect 1/3-1/2 of the BLM amounts as those are 1/8th roy and 10 year terms.
How much to push anybody, or how much work to put into it is all a function of how many NMA you have. If it’s a few acres, doesn’t really matter. If it’s all 320 acres then dear lord get more offers. That all said, $10k/nma seems pretty decent to me @ 1/4 roy.
Thanks!