We have recently been contacted by Magnolia Oil about leasing some acreage in Karnes County. They are proposing a contract where the mineral owners get 18.75% royalty. I thought the standard was 20%. Does this sound correct? Are they a reputable company?
Magnolia Oil Leasing Question
There is no standard lease and no standard royalty. Usually offers start out low and it is up to the mineral owner to ask for more bonus and more royalty. In Texas, I would always prefer 25% royalty.
Any chance you know what Abstract or Survey your property is located in to give us a better idea? For starters, yes, they are reputable, but 18.75% is a low ball offer.
I’m not sure of the abstract but it’s just east of Falls City in Karnes county. They are only using 35 acres in a unit of approx 50 acres
Y’all are probably in the A. Hernandez Survey, A-4. Do you know if your acreage falls in to Magnolia’s Foo Unit? That permit was approved two months ago. I’m familiar with that area of Karnes and your property is in a great location. You should ask for a solid price per acre and bump that royalty to 25% (in my opinion).
No it’s not in that unit and I had a typo it will be part of a 250 acre unit.
Get 25% or walk away. Is they won’t go to 25% then they’re not reasonable.