I have had an offer to lease minerals in Divide County Township 162N, Range 95W, Section 28, and also in Township 162N, Range 96W, Section 34. Does anybody know what the going rate is in this area?
Ms. Watters, the latest I have heard was $1,000 per acre and 20%. I'd ask for $1,500 per acre and see what they say. The nearest wells around you are in my opinion better than marginal, not what I would really call good compared to many wells but they aren't just paying for one well, they are paying for the rights to all of your oil and the value is still considerable. I don't think they would be spending $5,500 per acre to drill a well if it wasn't. The royalty is basically a kickback and will actually be pretty small unless you have some dozens of acres unless/until the operator gets your spacing into full production. The bonus check and the first production checks are probably the only two large checks you will see for a long time and the bonus check is the one you can do something about up front.
Thanks for your help. $1,000 and 20% is what they offered. I tried to bargain and she said that was the top they would pay in that area.
Ms. Watters, everyone has a different style of negotiating and often the amount of acres you have play into it. I could not in good conscience advise you to tell them to just force pool you because your well is going to take probably 4- 5 years to pay off and probably another 5 years to pay off the penalty, 10 years before you would become a working interest. I would do it just to preserve the future upside because unleased the minerals can appreciate for my benefit but if you lease they appreciate for the lessee's benefit. Maybe you could split the difference and tell them you will lease half of your acres, and go non-consent on the other half, I gurantee that you will give the landman heartburn. Tell them the truth, it's not enough money, you might want some acres unemcumbered because you may have to sell some or want to keep the option open for a future upside.
I also feel like I am never getting their best offer as long as I am talking to the landman who is not in-house. If you reached the in-house landman, they might give you another $250 per acre just to make you go away.
The deal is not just 2 points, yours and theirs, there are as many points as there are in a pincushion. You could say that since they are only paying $1,000 per acre you must have a no deductions clause which would considerably beef up your royalty and the well will have to make significant money before the loss of deductions from your royalty would really matter.
You could just tell them you are seeking someone else to lease or buy your minerals and quit talking to them. If they think they are the only one you are talking to, they can be reasonably certain that you will wear yourself down and they will have your acres in the end. They can't be sure of that if you are looking for a different lessee. They would rather have your acres or they wouldn't have asked in the first place. I wish you luck.
Julia Watters said:
Thanks for your help. $1,000 and 20% is what they offered. I tried to bargain and she said that was the top they would pay in that area.
Not sure what the going rate is now...I have a lease within this section that has a couple of more years to run. It was with Samson Resources but is now with Continental Resources. Glad to be with Continental so far. Don't know who your Landman is representing.
Have you leased your acreage in Divide county yet? How many acres do you have?
Please get me some more info. I am interested.
Derrick Ryskamp
(701) 570-4502