Is 3 yr lease, 2 yr ext., $400 bonus, 1/5 royalty, James English survey, A-186 a good offer?
Not a good offer. Should be at 25% royalty. Would also limit to 3 years with no option. Could go back requesting a higher bonus. The latest U.S. Lease Price Report for Shelby County says $ 1100 is the most common bonus, so I think this is a lowball.
Really appreciate your forwarding of U.S. L.P. Report. Very informative, although I don’t quite understand how the High amount of bonus is 1100 but the Most Common is 1225. When negotiating, would it be best to counter-offer with a lower number than the 1100, but stick to 25% for Royalty? Will definitely counter with 3 years, no option.The company making the offer is Legacy Reserves Operating.
The high was $11,000, was probably for a very small tract. You could counter with $1225 and site the report. Definitely think you should get 25% and no option.
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I thought the 11000 figure was a typo, thank you for clarifying!
While those reports are useful, it’s important to know that not all of Shelby County is created equally. Certain areas of Shelby are a lot more productive, and therefore more valuable, than others. Those higher bonus prices mentioned are most likely found further east of your acreage. I always think it’s good to counter the first offer, but don’t be surprised if you only get a small bump in the bonus price and nowhere near the 3x counter some are suggesting. Good luck!
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Very grateful for this candid advice. Is it possible to access a map of Shelby County showing abstract areas, abstracts, and perhaps tracts? Many thanks.
Appreciate this, definitely will go to site.
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PermianResearch is right. Use the Lease Price information to bargain for a higher bonus amount, but do not be surprised if Legacy Reserves Operating doesn’t match the Shelby most common bonus. I would stick to the 25% and 3 years, though.
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Thank you once again. I was coming to same conclusion.
25% 3 year term, no extension. That’s the move
Who was the company offering it up?
Legacy Reserves Operating LP. Apparently they have been drilling extensively in areas SE and SW of our land.
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