Offer for Selling Working Interests? - Lea County, S27 T20S R34E

I’ve got a small working interest in a project that will be multiple horizontal wells in a pooled development unit being formed across the entire section (i.e., have interests in 1 of the 6 tracts so will net out to be a smaller piece of a larger pie). I am the last to sign the operating agreement (so don’t plan to but would go to a forced pooling hearing if I didn’t). I still may participate but am also talking to a couple of groups about selling. I’m more interested in a larger royalty versus up-front cash.

I have three questions on selling these interests:

1) how much should pending drilling -- as in permitted, spud in < 30 days -- affect an offer? Does the forced pooling give any leverage (as in avoid the need to deal with and/or get my small share out of having to deal with on the working interests)? I’m thinking since often buying rights is speculative and hopeful for future drilling this known project should increase the offer.

2) how much is effective NRI (so working interest % / net royalty interest %) factored in to an offer? I read elsewhere than an operator/acquirer wants to keep this to 75%. So if an interest is at say 87% will that delta between it and 75% be the real range the acquirer will want to stay in? Conversely is this a good range that I can try to negotiate in?

3) any thoughts on the importance of or success negotiating on a limit for post-production terms and expenses? I read elsewhere on this forum that you should ask for $0 (so all costs paid by working interest holders besides taxes) or a limit of say 10%. Also read about trying for “produced and saved or used” (for gas anyway) language in the royalty terms.

Other Lea Datapoints:

  • Initial Offer – is a 3 year term assignment with a 4% royalty (so is this equivalent to saying a 1/20th?); this seems very low so planning to counter and/or try to get a couple other offers.
  • Exchange – talked with someone at one of these about listing this (i.e., if don’t get one of the other interest holders to make a decent offer) and he thought a 20% royalty was reasonable
  • Other Sale – while this one was all-cash, rights on another tract of 4.75 NMA in this same section were sold for $6,000 / acre in 2013. Think these were bundled up with some other interests acquired and sold off as part of large Marathon acquisition.
  • Other MRF Posts - didn’t see any responses to this immediate area and may have missed some but saw an “offer at 700 & 1/4 for 80 acres in sec 29 15S 37E” and from for “other Lea go for $250/acre to over $8000/acre in the past 6 months” and “lease my 36.11 net acres at this location for 3 years with $6000/A bonus and 1/4 royalty”