Lease offer questions

Gulf exploration proposes to drill a horizontal well at Section 32,18,4 and is offering a lease of $700 for 1/8 th delivering an 87.5% net revenue interest. Or option 2: $650/1/8 th @ 81.25% interest Or option 3: $600//1/5 th @ 80 % interest Or option to share in the well costs 3 year term only

I don’t understand the net revenue interest. Could someone explain that in more detail. It sounds like if I pick a higher interest I’m getting that on a lower revenue interest. Is this a good offer or should I wait for pooling? Does anyone know if there have been any other new wells close by. Besides the minerals rights I own part of this land that they want to drill on. Does that mean anything else for me.that I need to be aware of?


I would stay way from the option to share in the cost of the well unless you have lots of money.

If you think it's going to be a good well, you may want to take less bonus and more production interest.

Is it from the well head? I don't understand the first offer, but I think it's 1/8 net instead of gross, so they will be taking lots of cost out of it. Transportation, accounting, etc can become costly.

I would suggest you get a good oil & Gas attorney that can help you on the lease.

zero post-production ēxpenses, do not give in. Water disposal, "marketing" & transportation costs will eat you alive. Royalty should be based on GROSS production. 1/8th gross w zero expenses will beat 20% of net hands down 9 of 10 times.

As I was looking through the questions here, I noticed sec 32 18n 4w was mentioned. Is this in Logan county? Our family also has mineral rights on 32 18 4. 15.75 aces. I just got a cold call with an offer to buy. My Mother has several gas and mineral rights scattered around Logan county. She's elderly, and is ready to sell what she has . The money would help in keeping her in her home , rather than putting her in a home. The offer was for sec 32 18 4, and was a pretty good offer, but I have no idea whats going on in that area. Although, after reading your post, I see Gulf exploration is proposing to drill a well. No wonder I got a cold call. Can anyone tell me what a fair price would be, if we decided to sell.

thank you


I wouldn't sell unless you really need the money. Most of the offers I have got were about $2,500 in that area. I don't know if that is a good offer as I don't sell mineral.

thank you for responding to my questions. The money would be helpful for my mother's care because she's elderly, and not in the best of health. The royalty checks she gets, are not that substantial. In her lifetime, she would never get the amount of money from those royalties, as would she get if she sold. When she passes, all this will be divided amongst myself and 3 sisters.

and because I'm power of attorney, it will be a nightmare for me.. family (sister) drama...! I just feel, and so does my mother, that its time to cash in, and be done with it all. The offer we got was in that ball park, so your response was very helpful. If anyone knows anybody who may be interested in buying, please let me know. Thank you again..