Leasing Options in Kingfisher, OK

I own mineral rights to 160 acres in Kingfisher County, OK. I have been offered the following options for leasing:

$350/acre - 3 year lease, 3/16 royalty

OR

$400/acre - 3 year lease with a 2 year option to extend, 3/16 royalty

Can anyone offer any insight or give an opinion on this offer? It's my understanding that mineral rights are currently being leased in Kingfisher County by several companies.

NARB,

Are there any producing wells around the mineral acres you have? Personally I don't like extensions. You never know what minerals will be worth in three years. Sounds like you might have found an up front landman making the offer. Have you tried to locate any of the other mineral owners to see what they were paid as a bonus. I believe you can get better than 3/16 royalty. I was offered $250 acre for a lease and told the landman it was less than what minerals were leasing for. He immediately went up to $350. Usually thay have a lot of wiggle room, you just have to squeeze them a little to get them to wiggle in your favor. I'm sure there is a regulatory commission in OK where you can find lots of info. Good homework pays off in spades. I wish you much luck with it.

Wes Luke

I just found out that land adjacent to mine brought $1000/acre with 3/16 royalty with another company fairly recently. The land man who made my offer said he gave his best offer up front when I countered, but that’s a little hard for me to believe. I know there are two old gas wells and possibly two gas or oil producing wells nearby.

Wes Luke said:

NARB,

Are there any producing wells around the mineral acres you have? Personally I don't like extensions. You never know what minerals will be worth in three years. Sounds like you might have found an up front landman making the offer. Have you tried to locate any of the other mineral owners to see what they were paid as a bonus. I believe you can get better than 3/16 royalty. I was offered $250 acre for a lease and told the landman it was less than what minerals were leasing for. He immediately went up to $350. Usually thay have a lot of wiggle room, you just have to squeeze them a little to get them to wiggle in your favor. I'm sure there is a regulatory commission in OK where you can find lots of info. Good homework pays off in spades. I wish you much luck with it.

Wes Luke

NARB,

I believe you just found the answer you were looking for. You should be dealing with the other landman, not the one who contacted you. You also need to buy a GOOD lease that doesn't give away any profit you might have made with transportation, taxes levied on the oil company, processing fees, water disposal & storage fees, etc., etc., etc. Never use a lease drawn up by a landman or oil company unless you have a good O & G attorney who understands them inside out. If you don't have an attorney, your best bet is a GOOD lease that will cost you $125.00 and save you thousands in royalties and charges back to you that you shouldn't have to pay.

I do wish you the best of luck in your dealings. If you believe people make their own luck, contact me in my profile, private message.

Yours,

Wes

NARB,

I had a land broker tell me that if "you have more acreage to lease you get a larger bonus". I am wondering it that is the case with the adjacent land? I seriously question it so would appreciate that input.

Ron

Of course it's true Ron. If you have 20 acres you get twice as much bonus as if you had 10 acres. You need to research what production is like and how much other people leased for around you, contacting other potential lessees to get competetive offers, to find out how much you could get whether you have 10 or 20 acres. I also suggest that you deal with landmen through mail and e-mail, so you have a record of what was said. They can tell you anything on the phone or in person and there is no record unless you are recording the conversation. I think frequently people who have alot of acres lease for less because it takes less per acre to make it worth their while. Sometimes the landman has a stake in leasing you cheap, they could get a slice out of your deal, royalty interest or cash. Do your due diligence and make the best deal you can. You might message Wes Luke above, to see what he has to say. I'm fairly certain he wouldn't mind sharing with you information he offered to Narb. Good luck.

Ron said:

NARB,

I had a land broker tell me that if "you have more acreage to lease you get a larger bonus". I am wondering it that is the case with the adjacent land? I seriously question it so would appreciate that input.

Ron

The response I had gotten was more acreage higher bonus per acre not just multiply by acre. Had seen NARB's neighbor's bonus and pushed that but got a negative feedback. Had also had a conversation with a Kingfisher city person 5 yrs ago and was told they were getting 5/16 royalties there. Has anyone heard of that recently in Kingfisher county?

Ron~

We did not end up getting as much per acre as our neighbor...the landman with the original offer wouldn't budge on price and no one else we contacted was interested in leasing at that time. Our royalties are 3/16.

Hope that helps...