I have mineral rights to 160 acres in Pratt County, KS with one producing oil lease I have 80% royalty interest and 100% working interest. I have an offer to farmout 150 acres for $75/acre bonus and 5% override.
I believe this is located in the Mississippi Lime Play. My questions are.... is this offer reasonable? and if I choose to convert override to working interest after pay out should I ask for a different percentage?
Is the current well producing enough to hold the lands for some time to come?
If it were me, I would suggest delivering a 75% NRI lease with an option converting all or a portion of your retained override at payout of 40-50% WI, on a well by well basis. The carry really depends on your risk aversion and cash liquidity.
Is the current well producing enough to hold the lands for some time to come?
If it were me, I would suggest delivering a 75% NRI lease with an option converting all or a portion of your retained override at payout of 40-50% WI, on a well by well basis. The carry really depends on your risk aversion and cash liquidity.
Hey Buddy you kind of lost me. The current lease produces about 450bbl a year a nice little income it will not be included in farmout. ..you suggest I deliver 75%NRI lease..... explain 75%NRI are you meaning 75% override to be converted at payout of 40-50%WI on well by well basis. What are you basing 75% on? I am a little slow understanding that part. Donna said:
Buddy Cotten said:
Dear Donna,
Is the current well producing enough to hold the lands for some time to come?
If it were me, I would suggest delivering a 75% NRI lease with an option converting all or a portion of your retained override at payout of 40-50% WI, on a well by well basis. The carry really depends on your risk aversion and cash liquidity.
I made some faulty assumptions. If you are not aware of these terms as a working interest owner, I suggest that you employ an attorney experienced in these matters to review any documents drafted. There are many moving parts to a joint venture.
Best
Buddy Cotten
Donna said:
Hey Buddy you kind of lost me. The current lease produces about 450bbl a year a nice little income it will not be included in farmout. ..you suggest I deliver 75%NRI lease..... explain 75%NRI are you meaning 75% override to be converted at payout of 40-50%WI on well by well basis. What are you basing 75% on? I am a little slow understanding that part. Donna said:
Buddy Cotten said:
Dear Donna,
Is the current well producing enough to hold the lands for some time to come?
If it were me, I would suggest delivering a 75% NRI lease with an option converting all or a portion of your retained override at payout of 40-50% WI, on a well by well basis. The carry really depends on your risk aversion and cash liquidity.
I do not think financially it would be wise for me to convert to more than 35% WI. I would also rather forget about a bonus and negotiate a better deal for myself. any new ideas? Thanks for pointing out it needs to be on a well by well basis.
thanks again
Donna Buddy Cotten said:
Donna,
I made some faulty assumptions. If you are not aware of these terms as a working interest owner, I suggest that you employ an attorney experienced in these matters to review any documents drafted. There are many moving parts to a joint venture.
Best
Buddy Cotten
Mineral Manager
Donna said:
Hey Buddy you kind of lost me. The current lease produces about 450bbl a year a nice little income it will not be included in farmout. ..you suggest I deliver 75%NRI lease..... explain 75%NRI are you meaning 75% override to be converted at payout of 40-50%WI on well by well basis. What are you basing 75% on? I am a little slow understanding that part. Donna said:
Buddy Cotten said:
Dear Donna,
Is the current well producing enough to hold the lands for some time to come?
If it were me, I would suggest delivering a 75% NRI lease with an option converting all or a portion of your retained override at payout of 40-50% WI, on a well by well basis. The carry really depends on your risk aversion and cash liquidity.