Lease on James Gorman A-285

approached with lease for 5 yr at $500 and 1/5 royalty. we (5 of us) have 1/4 mineral rights from grandfather purchase in 1936.

From what we understand this is to low for a 5 yr plus should be 1/4 royalty. May should be 3 year at $500.00 more like 700.00 for 5 yr.

Also they took 2 acres off saying the 2 acres sold in 1971, however my grandfather had the 1/4 mineral rights since 1936 so the mineral would still be there. They did say they think they made mistake and was to give the 2 acres back.

Any thoughts on the above, like what or what not to do.

Mary

Hi Mary,

I've fought this dilemma many times. My grandfather said "never take less than 1/4," yet all I am offered is 1/5 royalty and I'm lucky to get $500 per acre signing bonus in Harrison County. I suggest you hire an independent landman who works Harrison County and seek his/her advice on what offer would be appropriate for your lease agreement. It will cost probably a day to a day and a half for the landman's fees for his/her time, research and advice. Fees I've run into are $400 to $500 per day. But the landman can research the activity in your area, can explain development close to your acreage and advise a fair and reasonable price for your lease. I found the investment in a landman's advice well worth the fees. Hope this helps. I wish you the best. Diana


Good afternoon, this advice may come to you a little late, but the money up front is always nice...

The royalty is where you want to make your $$$. Don't get too consumed by the bonus. it nice but not the deal breaker.

Some companies will give you more up front and less on the back end.

I would rather have the higher royalty than the higher bonus.

Hope this helps!
D H Y said:

Hi Mary,

I've fought this dilemma many times. My grandfather said "never take less than 1/4," yet all I am offered is 1/5 royalty and I'm lucky to get $500 per acre signing bonus in Harrison County. I suggest you hire an independent landman who works Harrison County and seek his/her advice on what offer would be appropriate for your lease agreement. It will cost probably a day to a day and a half for the landman's fees for his/her time, research and advice. Fees I've run into are $400 to $500 per day. But the landman can research the activity in your area, can explain development close to your acreage and advise a fair and reasonable price for your lease. I found the investment in a landman's advice well worth the fees. Hope this helps. I wish you the best. Diana