New Info on Lease Offer for Block 55 Twp.7, Sec. 16


Update three and I’m sorry to keep posting: I’m I misunderstood the held-by-production thing because I can’t find a Chevron well within dozens of miles of us. All sounds like phony baloney so we told the bank no.

Update two: OK, more info. We are told that the reason the offer is low is because Chevron owns the other half of our acreage (SIL owns other quarter) and Chevron holds minerals above 14,000 feet by production on an extensive pool that includes our section. (There are no wells on our section.) Of course, the acres we own are not held but whoever leases will have to deal with Chevron and may be only able to work lower than 14,000 feet. Does this all make sense? BTW, our holdings are 1/4 of 524 acres. (SIL the same.)

Original post:We have an offer at $1500 an acre, three years, 25%. Considering that Apache sank a test well in the section directly to the NE of us - and then in May spudded a new oil/gas well there - $1500 seems a bit low to me. We are held in trust and a bank is doing the negotiating but they do listen to us. So if we should hold out, I’d sure like to know.

There have been some decent oil wells come in a few miles to the east and NE of us.




Seems really low. I hear $12,000 more often. A few sections to your north went for about $10,000 in last April’s GLO sealed bid…one closer to Pecos for around $18,000.

Have you heard anything about Apache’s test well? How do you find out when a well spuds?


Apache spudded May 19. But if they are completing the drill right now, I don’t know. You can find the spud date on the drilling permit (assuming they have spudded).

I’ve added info in the original post on why we are being offered a low bonus. Have no idea if it’s blowing smoke or not.



Forgot to answer your other question. I don’t know how to find out about the results of the test well. But I assume it was good because Apache immediately permitted a new well and spudded very quickly.


Yes, that makes the valuation more complicated. Well, previous experience tells me the first offer usually leaves a lot of move up in price available. Lease terms are as important as bonus. Do you mind saying who made the offer?


The offer was made by an intermediary - Scarlet Land Services LLC. A similarly named company executed a lease on a section a couple of miles south of us, and it was a very bad lease for the owner. The lease was posted online, which usually means it’s a Producer’s 88 though this lease didn’t say it was. Anyway, the royalty was 20% and the other language very good for Scarlet, pretty bad for the lessor.

As far as our potential lease goes, the bank and Scarlet are still going back and forth on the language.


I just read again your added info. Any idea why Chevron hasn’t come back to lease the lower depths? I’d think they’re the prime operator for that. Might be worthwhile to approach them if you haven’t recently. I hear they’re interested in the Permian, but going at a steady/slower pace than the independents.


We are held in trust and we only know what the bank tells us. But I do not believe our bank approached anyone. We’ve always waited to be approached.

For all I know, Scarlet is representing Chevron. But they could be working for Apache - or even as a flipper. (However, they have led the bank to think they are representing someone.)

At this point, we personally do not trust Scarlet and have told the bank we are not interested in $1500. There is no hurry.


Apache uses various leasing agents and is the active driller in that area. Its lease offers have slowly risen from $800 to $1500. Not a lot of other companies have been interested in leasing Apache’s Alpine High area. Perhaps as pipelines are built, there will be more interest. What information do you have on the Chevron pooled area? It seems odd. Ask for related recorded paperwork, because it seems unlikely that it is a truly pooled unit, but could be some drilling area. Chevron owns a lot of minerals in the area. Be patient and make sure you get good lease provisions.


Thank you, TennisDaze! Apache has a well under development in the section directly to the NE of our section. It is billed as oil and gas. It’s not finished so no results. Apache has also leased in sections around us, though not all of them, as far as I can tell.

I did some research and can’t determine who owns the other half of our family’s property in Sec.16. So Chevron could own it. But the only lease I can find in our section is for the NE quarter (which is not ours) and it isn’t to Apache or Chevron, but to Mitchell Petroleum (or something like that). So Chevron probably doesn’t have a lot of leases immediately around us, and there are no active drilling permits around us except for that Apache well.

On the other hand, Chevron is part of a couple biggish pools to the east of us, in Blk 54-7, Sections 13 and 14, and Sections 7 and 10. Note the similarity to our property - Blk 55-7, Section 16. The terms of those pools are exactly what the bank described - largish and held above (about) 14,000 feet. I believe those pools several miles to the east of us are what the Scarlet guy is referencing, for whatever reason.

In any case, we are not accepting the offer. We are in no hurry. Thank you again for the very helpful information.


Hi, Liz M…

If I remember my section maps right…your land is west of Orla in Reeves county, north of Pecos…
There’s great prospects there in depths below 10000 feet. High volume ‘wet’ gas and good oil production as well.

Scarlett is a hired gun to low ball offers to mineral and surface land owners. There’s another popular one…may be the same company under a different name (JAZ Land Offers). Usually Apache and
Chevron won’t employ these sleazy low ball offerers. So, I’d beware of letting your bank deal with them. By the way there are no banks with experienced oil and gas lease negotiators who have ever
stepped foot out here in Reeves county and really LOOKED at the land. Negotiations need to be based on good subsurface intelligence of the available stacked shale plays and the dimensions of the
oil and gas reservoirs trapped in that area between the shale layers, to give a decent estimate of the recoverable volumes of oil and gas present.
Yes, be patient. Time is on your side…these oil and gas exploration firms have boards of directors
to answer to and they are always breathing down their necks demanding they perform…get those wells drilled and production flowing. The board of directors is getting heat from the investors to perform as well.

ol’ Lawrence in Verhalen


Liz is talking about a lease, not a sale of rights. At 1/4 royalty the bonus may be okay. But ask for more, like $2500. At 130 or so nma the value of 1/4 over 3/16 is appreciable.


Apache will persist in low bonus and adverse lease provisions to try to wear you down. This is a tough company to negotiate with. It signs GLO lease form on mineral classsified lands, but will object to similar provisions for you. And Apache likes to cite Chevron’s mineral ownership as scare tactic of it may be too hard to fit in a well.


The $12,000 figure was lease bonus, not sale. But to be fair, that is toward the top of the market and prices of course vary based on location in the county. For some context, the General Land Office’s minimum bonus for leases in Reeves is $3,500 per net mineral acre, 25% royalty. Like I mentioned earlier, last April one of their tracts leased for around $18,000 per nma. It was 40 nma south of the town of Pecos, near the river.


Any advice/strategies on how to negotiate pipeline easements? Anything Apache-specific? I haven’t dealt with them before here on the north side of the Basin in Eddy County. Like all operators, I’m sure they’re trying to control costs as best they can. If you’re too “difficult” I imagine they start looking to your neighbors to try to get a better price, since they place these gathering lines along your property line anyways.


Kathy: WOW! I never saw a lease bonus in that range! What royalty rate would it yield?


Texas’ General Land Office will only do a 25% royalty. I think University Lands is the same, but someone else will need to confirm that. Texas Pacific Land Trust, a big acreage holder in the area, I would think does the same, assuming they hold the executive rights to their interests. Can anyone confirm how TPLT does leases for their many small mineral interests throughout West Texas??


TPLT sold their Mineral Rights many years ago. They only hold Non-Participating Royalty Rights now. No leases to be negotiated.


Here you go:

Go to:

Click on “Maps” on the right side, then click on “View Map”, then look to the upper left corner and you will see a “+” & “-” toggle.

Be careful - it’s sensitive, apparently especially when you have a wheel on your Mouse, but zoom in on West and Central Texas until the map populates and you can see the tracts that the Texas Pacific Land Trust owns royalties in.

Above the Zoom toggle thingy in the upper left hand corner is a small menu that will show you which properties they have a 1/16th NPRI in and which they have a 1/128th NPRI in (color coded).

Hope this helps!


Thank you Charles. That’s a great map showing all their holdings. It’s even mobile optimized and shows legal descriptions of lands throughout the county.