Can some give me a few ideas on signing a lease. I have been offered 3/16 royalty in Jones County at $50 an acre. Does this offer sound fair for anyone who has knowledge in that County. This particular property had two oil wells on it 25 years ago but were capped when oil fell to $10 to $15 a barrell. Does the bonus payment normally be included in the lease as part of the terms. Secondly how concerned should I be about an indemnity agreement in the lease agreement. It would appear to me that lessor actually should be named as an additional insured under the oil co. insurance policy. I only own the mineral rights not the property and the property is a farm
Donald:
In regards to the bonus/royalty offer, I am unfamiliar with the Abilene area but according to the Jones County website section, the rates being offered were somewhat low in 2011. I can verify that the bonus payment is not included in the lease terms. Perhaps not much activity is currently occurring in this area but you can access the RRC website in order to identify the nearest "new production" to your mineral area. I would advise not to sign a lease agreement for longer than 3 years with no extension in the event that developement begins to occur in this area over the next couple of years.
Not even remotely if this is in Texas in the Barnett Shale - Several hundred per acre and depending on where you are maybe 1-2K. 25% royalty. I don't know how far you are from Muenster Texas (if you are in Texas) but an excellent attorney who is very familiar with leases in the Barnett Shale is Chuck Bartusch. If you aren't near there or aren't in Texas, find a good oil/gas attorney. What you have is a really, really, really bad offer.
and maybe a 2 year lease.
Are you in the Permian Basin? If so, there probably are many seasoned oil/gas attorneys in your area. They will be worth every penny you pay them.