We received the initial offer (these seem to take a great deal of time to put together) from Antero in Pleasants County, WV. Here is what we have seen just looking it over initially.
Royalties: For oil, 12.5% of gross proceeds, less 12.5% of post production costs. For gas, including casinghead gas or other liquid or gaseous substance, 12.5% of gross proceeds, less 12.5 % of post production costs.
How is this and what else do we need to look out for? I have some thoughts, but this is the first time.
If you don’t sign any lease, and get “forced” into a pool when a well is drilled, you get a lease with no deductions. West Virginia Law. Also you get the highest % of anybody who gets leased. If you have a small acreage, you don’t have a lot of leverage on getting a big bonus or a high royalty % but thanks to the WV legislature several years ago, you get at least a decent deal. Always a good idea to have an attorney look at what you are doing.
Consider Antero’s initial offer as an insult. The 12.5% is the minimum required by the state of WV. Counter with 18% royalty on all products gas, oil and NGL’s and require a no cost clause on both production and post production expenses. The bonus for signing the lease should be nothing below $4,000 per net acre. Companies always lowball but this is ridiculous. Depending on your total net acres you may want to consider an O&G attorney to help with negotiations. Good luck.
@UncleJed If you take that offer you might as well give away your mineral rights. Make sure any offer you take is gross proceeds, but what I’d do is search for some mineral companies to get competing offers - there are a number that specialize in West Virginia