Lease offer questions?

I received a lease offer for mineral rights I hold.

I’ve never personally leased before as I just recently inherited this.

Any advice??

Here’s what I was offered:

Per my voicemail, our records indicate you own following mineral interest own is unleased and as such we would like to lease (or purchase) the interest.

12.00 net mineral acres

Section 15

Township 23S, Range 26E

Eddy County, NM

We would like to offer the following terms to lease for your consideration:

3 year primary term with 2 year extension20% royalty interest$1,000 per acre bonus payment

Additionally, if you are open to selling your mineral interest we can provide an offer for purchase.

Its not terrible. Not great either. I think I’d try to get out of the extension and ask for a slightly higher bonus, but in the end I’d guess that offer is pretty standard. 20% royalty there is decent IMO. If there are wells drilled they will make a decent amount of associated gas so feel free to try to get post-production costs/deductions taken out but I’d guess there is a very small chance of them agreeing to that.

On fringey stuff I am of the opinion that you are pretty much just hoping they drill wells in which case you will make a lot of $ on the royalty. If not, well then they lease you again in 3 years. Your bonus won’t be very high. The difference between a $1k bonus and $1.5k bonus vs the possible royalty payments is trivial even with a fairly low % that they drill. But hey, more money is more money. At 12 nma I’m not sure I would sweat things too much. Sign a lease. Wait and see.

Earthstone just drilled wells about a mile to the west mid-year 2022. If this isn’t Earthstone offering (the operator) I might call them up and see if they would make you an offer.

The offer I received was from Sarvis energy. I can’t find any information about them online except for their own website???

Huh. I google Sarvis energy and I got nada. No clue who they are.

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