Hello!
I have recently inherited a small interest in mineral rights. We were offered $250 an acre for 3 years. This seems quite low compared to all the research I have done so far. Does anyone have any insight or knowledge that could point me in the right direction for negotiations?
Also, does anyone know how I can find out who else has interest in the same section and block??
Thank you in advance for any assistance!
Best,
Michelle
Hi, Michelle!
Congratulations on your inheritance.
What County are your properties located in?
Depending upon where your interests are located, you could lease your interests for CONSIDERABLY MORE than $250 per net mineral acre.
Lease negotiations are not difficult once you've been through the process a few times, but I can see how it might be a little intimidating for someone who is new to "the industry".
To start you off:
1. You want a 1/4 (25%) royalty reserved to you in your lease.
2. You want it to be for a straight 3 year Primary Term.
3. You want the highest per Net Mineral Acre (NMA) Bonus Payment you can get.
3. If they want to include an Option for them to be able to Extend the Primary Term by two years (called a "3+2"), you want the Bonus Payment for Extension to be greater than what they paid for the original Lease.
There are any number of additional clauses or provisions you can add to a Lease to better protect your interests, but there isn't room here to include them all. At a minimum you want to add a "Pugh Clause" and a "Depth Severance Clause".
If you own the surface, that changes a lot of things.
If you have any producing Wells in your Section, the Owners of the mineral and royalty rights will be available in the County's Mineral Tax Rolls. Texas Counties Tax Producing Mineral Rights Owners.
Once I have identified your lands, I will be happy to look up whether any producing wells are presently located on or include your lands. If there are, I can look up the Mineral Tax Rolls for you.
The only other way to determine who else owns interest in your Section would be to research the County Clerk, County Court Clerk and District Court Clerk's Records. That might take beginning at Sovereignty (Land Grant or Patent) and researching the Records through to today.
That's called "Title Research". It's one of the things that Landmen do.
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
Hello Mr. Tooke,
Thank you so much!! Our mineral rights are in Howard County.
I am pretty sure we do not own the surface rights-my great grandmother sold her land back in the 60's but I am still doing research.
I checked out the map on the RRC site and we do not currently have any active wells on this section.
Best,
Michelle
You can find the County Clerk's Records for Howard County back to 1/1/1900 on www.TexasFile.com
Also, one of the additional Clauses or Provisions I mentioned that you can add to any lease is one requiring the company to provide you a copy of all Leasing Title Notes, Mineral Ownership Reports, Title Run Sheets and Title Opinions that they either prepare or obtain regarding your lands. That will be THOUSANDS UPON THOUSANDS of dollars' worth of information for free.
Attached is what I could pull up on your Section 18 off of www.DrillingInfo.com (DI). You are correct in that there are no presently producing wells on or including your Section, but there are some moderately successful wells all around you.
From the leases DrillingInfo has for your Section since 2006, there appears to be only a handful of owners of the mineral interests, all multi-generational owners.
Hope this helps!
Charles
400-LOCATORMAPSCURRENTLYPRODUCINGWELLS.pdf (383 KB) 401-DILEASES20062016.pdf (797 KB) 402-AERIALSEC18BLK25A1350HOWARDCOTX10946FEET.pdf (153 KB)Hello Charles,
Thank you so much for all of this information, it is so helpful. I have reviewed it, and it is interesting to see that my extended family still owns it!
Just one more question, one company is offering a top lease for $10 per NMA and the other company would like to renew their lease. What is a reasonable rate to negotiate? It looks like one my relatives was getting $400 per NMA (if I am reading the "bonus" correctly).
Thank you again!
Best,
Michelle