We just received a new lease offer from Cholla for about 51 nma in secs 5 and 8 Block 20, A-314 and A-1825. Terms offered were $150/nma and 1/6 royalty. I was surprised to get a lease offer these days. Seemed like a low offer. Any comments?
Seems like a decent offer considering sub $40 oil prices and minimal production in that part of the county. What kind of term are they offering?
I got the same offer. They wanted a 5 year lease. I would hope for at least 1/5
They want a 5 year term. I think we will counter with $325/nma, 1/5 royalty, 3 year term, and our own addendum.
We had à Fisher county lease offer recently for:
“$100/nma, 3/2, and 3/16ths royalty with our standard form.”
We countered with:
“1. $300 pnma 2. 25% royalty 3. 3 year term 4. approval of attached addendum”
No lease agreement was agreed upon or reached at other terms.
We are counting with $325/nma, 1/4 Royalty, 3 year term with optional 2 year extension, and addendum. The minerals are in Sections 5 and 8 , T&P RR Co Survey, Block 20, Fisher County, Texas. I have a joined with another party in negotiations. Let me know if you are interested in joining us.
For what it’s worth, from an operating company standpoint, I would rather pay a higher bonus or give a shorter term before I paid a higher royalty. At my last company at least, those two payments would be out of two separate buckets. The land department budget would shoulder the burden of the bonus and my reservoir department’s metrics would shoulder the burden of the royalty. The reservoir department is the one who picks which well to drill, so the wells with more royalty would sink down in priority (as in, we’d drill one with 1/5th before one with 1/4th).