I'm new to this group. I have been contacted by a landman about leasing 12 of 130 acres in Chambers County, near the Barber's Hill Salt Dome. I was initially offered $300 at 25% royalty for 3 years. This property has been leased before (2 years) for the entire acreage, but expired a couple of years ago. We informed the landman that we wanted $500/ acre at 25% and for the entire 130 acres. She said that Apache Oil is wanting to drill a deep well and will only lease the 12 acres. She has amended the offer to $400/acre for 12 acres, 25% royalty for 2 years.
How do I go about doing research to find out if this offer is reasonable? I have not visited the area in years. The area is not residential, and there are oil refineries all around.
Please advise.
That is a reasonable offer, you need to take it to an oil and gas attorney that works in the Chambers County area. If they really want to drill they should not have a problem putting an operations clause in the lease. They always say they are planning to drill a well, the attorney can put a clause that says there must be a permitted location or drilling program in place within X number of days or the acreage is released. I would still push for the entire acreage or make them provide you with a copy of the proposed unit showing your 12 acres within the pool.
Sound like you are doing good
Spoke too soon. I think you should push them to take more acres or push for a $1000/AC bonus.
Why pay an O&G attorney unless the drilling is really hot in the area and you want to get the clause that pushes them to drill. It can also push them to back away and go somewhere else. But if they really want the 12 AC. Then I would make them really pay for it.
25% good. 2 years is good. Ask for a $1000/ AC bonus firm