New Offer for Reeves County

Oil and Gas Leasing Help
1

Greetings,

I'd love some feedback for this recent offer for our very small interest (.5 acre) Section 27 in Reeves County:

-$4,500 per net mineral acre paid-up bonus
-no-cost royalty except for transportation to a more favorable market
-no delay rentals

Does this seem appropriate and fair?

Thank you for your time and attention!

Justyn

2

Seems good, but need to know the block number as well. Lots of section 27s in Reeves. Most of my offers have been around 1000 (southern portion offered by Apache). State told me to not get anything less than $1500 to $2000 in the south portion between I 10 and I 20. More northern areas, that is still higher than i have been offered.

3

Hi James,

Thank you for your response. The block is C-9.

4

There are several wells to the immediate south of you--one was a withdrawn location and another which used the same surface location that was permitted in December 2016. Last take point appears to be in middle of your section. Looks to me like they want to go ahead and lock you up before production starts. I can only say i haven't had that high an offer in months, if not years. for the small acreage you have, it isn't big dollars to them, but they can get it under lease. If the lease terms are okay to you, I would take it.

5

Thank you again for your thoughts.

It's a gamble.

I'm not sure what it means to 'lock me up' prior to production? Would I be better off to wait? I'm guessing they it is valuable to them simply by virtue of it's location.

I'm leaning towards signing the lease. However, the Trust doesn't have the capital to hire a lawyer to review the lease, I'll have to trust it is all above board.

6

I agree with James Marrow, for such small acreage, that sounds like a good deal. The general thought most times on this forum is, the bonus is a very minor consideration. The big picture is getting a having a good/great lease, with the best terms you can get and getting avwell drilled… in that order. Don’t EVER trust a lease is “all above board”. That would be a HUGE mistake. Linton

7

Thank you Linton,

What do you suggest we do in terms of lease review? I spoke with one lawyer who said it is simply too small for him...and I wonder if I would spend more money on a lawyer to review the lease than we might receive in the long run? The other lease the Trust has out, is making piddly payments every couple of months. I did not know about this forum, and probably signed a poor lease (though I did have someone in the oil industry look at it)

I'm trying to get the best deal possible here. But I'm flying solo.

-$4,500 per net mineral acre paid-up bonus
-no-cost 1/4 royalty except for transportation to a more favorable market
-no delay rentals

Again, many thanks for your thoughts.

8

Thank you so much Mike. I will follow up on this.

9

The language is confusing, to say the least! I'm trying to find the 3 year primary extension in the lease. I believe I found it:

'If, at the expiration of the primary term or at any time or times thereafter, there is any well on said land or on lands with which said land or any portion thereof has been pooled, capable of producing oil or gas, or any well that has been drilled which requires stimulation in order for such well to be capable of producing oil or gas, and all such wells are shut-in, this lease shall nevertheless continue in force as though operations were being conducted on said land for so long as said wells are shut-in, and thereafter this lease may be continued in force as if no shut-in had occurred'

If I understand this correctly, this allows the lease to continue beyond the 3 year primary if the lessee chooses?

Thank you in advance,

Justyn

10

With my 3 year lease coming to the end, there is a 2 year extension. Do they pay a bonus if they choose to extend the lease? There is a well that was just approved for drilling this last month.

11

Thanks Mike, this is so helpful. Yes, your last entry was deleted. I couldn't reply directly to it.

Thanks for your thoughts. Do you have a 'landman' you would recommend? I think it's a good idea.

Justyn

12

Past month we have received three offers ranging from $5,000 to $16,000 per net mineral acre.

13

where is the property? Reeves County block and section number?

14

Reeves County: The North 1/8 Section 27 Block C-9

15

Block C-6 Sections: 13, 14, 20, 21, 22, 23, 28, 29

16

To lease? Or sell?

17

All offers were to sell.

18

I've had a rough offer to purchase for $8k. Maybe that is the best way to go?

19

in my opinion, unless you really need the money now, i would not sell. offers to lease for 3 years are typically in the 2000 to 3500 range, so leasing once is half the sale price. My uncle was a landman, and his motto was that Land is the source of wealth. keep the minerals as long as you can. not making more of it. I have property in that area and i regularly get offers to purchase in the 10000 to 15000 per acre, but i will never sell these. new finds in the area will do well for you when the dig a well

20

Thank you for the good advise.