We received a lease offer from Lincoln Land & Tile, LLC on behalf of Warwick-Jupiter, LLC. The initial well (16-21 5WHX) will have an estimated true vertical depth of 17,405 feet and a true measured depth of approximately 25,370. The well is anticipated to be drilled from the NE/4 NW/4 of section 16-2N-5W and extend southward to the SE/4 of Section 21-2N-5W, with an approximate lateral length of 10,230 feet. The options provided are as follows:
Interest in the unit for $700/acre; reserving 1/8 royalty (12.5%)
Interest in the unit for $600/acre; reserving 3/20 royalty (15%)
Interest in the unit for $400/acre; reserving 3/16 royalty (18.75%)
Interest in the unit for $300/acre; reserving 1/5 royalty (20%)
Any opinions or feedback regarding this lease offering is greatly appreciated. If any more details are necessary, please let me know.
Welcome to the form! I know other people should weigh in , myself I go with the higher royalty payment! It’s more mail box money! Also be sure to get your payment when you sign the lease! Good luck
If you have not leased before and have more than a few acres, it would be wise to invest in a good oil and gas attorney to edit the draft lease. The draft lease the agent will send is not in the mineral owner’s favor since it was drawn up by the operator’s attorneys. There are quite a few clauses that need to be changed to be more fair to the mineral owner’s favor. You do not want any post production charges (among other things) . Most of us would want the higher royalty. Do not sign a lease without getting paid the same day.
If you only have a few acres and the attorney is not feasible, then waiting for pooling is another option and selecting the highest royalty then. You only have 20 days from the order in which to reply. Best to do by certified mail return receipt. I usually send mine in at the 10 day mark.
The pooling cases are already in the mail for notification if you have not leased. Case 2026-002605 for section 16 and case 2026-002606 for section 21. The hearing date is scheduled for July 27. Orders might be out by July 30 or so and then 20 days after that. Not much time to get a good lease negotiated, but it is possible. It would have to be done by the 20 day limit.
Thank you for your welcome message and reply. The feedback is appreciated. My wife and I are new to this forum and to the oil and gas industry. I do have another question. We received 2 more lease agreement offers from other companies for the same locations in Stephens County. This occurred over approximately 2 weeks. To your knowledge, is this common practice? The most recent offer is for ÂĽ royalty. Which, based on my research, is currently not common in this area. Thanks again.
Yes. Very common once the pooling has been announced. There can be many working interest owners in the section, but only one operator. If you don’t mind sharing, who is offering the 1/4? That would be the preferred option if you can get a good lease!
Thank you for your response and the information provided. Just a brief background: the management of the partnership for this activity was handed down to us by family members who decided to retire from the business. The partnership has been active in the oil and gas industry for several decades, and we have a working checklist and a document that specifies the partnership’s provisions, including Depth, Pugh, and Shut-in Clause. So, we believe we may have the legalities covered. Thank you for asking and not allowing us to enter into any agreement blindly. As for the ¼ royalty, the formal lease offer was from Heller Oil, Inc. Included in the offer is a cash bonus consideration of $350 per net mineral acre. Thanks again for your assistance.
This is an update to my previous post. We were able to negotiate a change to the cash bonus consideration. As stated, the original amount was $350 per net mineral acre. Heller Oil, Inc agreed to $500 per net mineral acre. We are moving forward with this offer. I hope this information is helpful to others. Thanks again to the individuals that provided input.
I received a similar letter and I’m really confused. My letter is dated June 25, postmarked July 27 and I received it August 5. I do not see any return or reply by date. I’m not even sure if it’s a lease offer but I do have similar options. The difference is that I have 5 choices, the first is “participate in the drilling of the proposed Jelly Of The Month 0205 16-21 5WHX with your interest by paying your proportionate share of drilling and completion costs…” 2-5 are the same options as the OP.
Does anyone know if this is a lease offer? Should I be concerned about getting it so late?
That is the standard letter that comes before pooling. It is to try to lease the remaining mineral owners. You do not need to sign it.
At this point, the pooling case listed above is in its final stages. If you do no have time to get a good lease, then the options offered at pooling will be the next step. As noted above, once the order comes out, you only have 20 days in which to answer.
