We got an offer to lease minerals in Williams County.
T159N R102W Sec 12
$1000 an acre
18% Royalty
4 year lease
It has not been previously leased and the company is trying to tie up leases in this area.
We thought it sounded like a good offer but were surprised that we would get this on a first offer?
An info you can provide would be greatly appreciated.
Thanks!
Gail:
We have minerals in T157N; R103W; Sections 29 and 31 so we are fairly close to you. As far as the bonus/acre, we leased ours in 2008 when prices were low so I couldn't help you there. Your best bets are to talk to someone who has recently leased in the area or go to the North Dakota Industrial Commission website , click on "Related Links" and click on "State Government"(North Dakota State Land Dept.), click on "Minerals Mgt. Div." then go to monthly sales by county. This will give you an idea of what bonus amounts are bringing at public sales. When our lease expires, I'm going for 20% royalty, and a 3 year lease with many new stipulations in the lease that currently is not in place. You might refer to past posts on this website to get an idea contents of lease. Just remember, they are you're minerals and you set your own prices and terms. If they are not interested then SHOP AROUND!!
I think that is a fairly descent offer actually. You should get a 3 year primary term though but for a first offer that is really good. It may be hard to get the 20% royalty and a higher royalty but this is a good start. FYI, the state mineral auctions will bring higher bonuses because everyone is going heads up against each other so don’t be disappointed if your royalty isn’t as high as those.
Do you have 100% of mineral rights on the section?
Gail, State Leases are 5 years and 1/6 royalty so keep that in mind when you are told you should be able to approach those values. They do give an indication of interest in your area though. Just make sure when you say 18% they are not talking 1/8th as that used to be common.
Of course it is easy to advise others when it is their money and not yours that is in the balance. I would however go for the 3 year term and ask for 20% as that is quite common. Also pay attention to and research the pugh clauses if you have other land in play. If you are happy with the offer and would kick yourself if this offer is withdrawn it is certainly worth considering. Mineral owner resource guides are great information to read to help familiarize yourself with the terms and put you in a better position to negotiate.
No Bill, we only have 8 in this section.
Bill Frothinger said:
Do you have 100% of mineral rights on the section?
Who is the company leasing?
I don’t know the name of the oil company. We will be talking to the landman again tonight.
Philip Mollner said:
Who is the company leasing?
Gail:
I would still hold out for a 3 year lease and 20% royalty if possible (on the royalty end). Be sure to research all aspects of the lease agreement (pugh clauses, etc.) Again, there are other websites explaining lease negotiations and 'wording" in leases as to what to watch out for when finalizing an agreement. Good luck!!
Gail said:
I don't know the name of the oil company. We will be talking to the landman again tonight.
Philip Mollner said:Who is the company leasing?
Thank you Charles! We will be talking to the landman tonight and we will also be having our attorney look over the lease before we sign. We really appreciate all the good advice!
charles s mallory said:
Gail:
I would still hold out for a 3 year lease and 20% royalty if possible (on the royalty end). Be sure to research all aspects of the lease agreement (pugh clauses, etc.) Again, there are other websites explaining lease negotiations and 'wording" in leases as to what to watch out for when finalizing an agreement. Good luck!!
Gail said:I don't know the name of the oil company. We will be talking to the landman again tonight.
Philip Mollner said:Who is the company leasing?
Why is it such a big secret what people are getting for their leases, my last lease back in July 2010 for Williams County N.D. was $500.00 for 4 ac. + $1000 signing bonus for 2 years. Did I do good I don't know because I had nothing to compare it with, and I live in Texas, don't know anyone to contact and ask up there.
F.J.A. Payne
Correction on my comment I got $500.00 per ac. had 4 ac. + $1000.00 signing bonus.
F.J.A. Payne