Received an Oil and Gas offer for 4N R68 for horizontal drilling. Negotiated royalty up to 20% but the bonus they want to pay is 1/3 + less than was offered in 2017. Would it be smarter to wait and see if more offers are on the horizon?
Lease offers are down from the peak of the shale boom in 2017-2019 so it is not surprising that you are being offered less in terms of the lease bonus. I don’t know exact amounts currently being offered in this township but you could try to contact other operators/companies to see if you can get a better offer. Not a lot of leasing activity in this township but it looks like Extraction and Incline Energy have leased in this township in the past couple of months. With the royalty rate, consider negotiating cost free royalty terms (no post production costs) to ensure you get as close to your negotiated royalty rate as far as gas is concerned. Without these provisions you may be subject to your proportional share of the cost to dehydrate, transport, compress, etc. the gas to get it to market.
Good luck! Matt Sands
I agree with Matt, we have found lease bonus rates reduced. We focus on the best royalty rate we can get and no post production costs as he mentioned.
That depends on how much is being offered. If you got $200 an acre last time, then $75 isnt a huge deal. Vs if you got 3000 last time, and 1000 now. It also really depends on sections when it comes to value. Also keep in mind, that if your royalty was less last time that will play a big part.
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