Offer of lease in Dawson County

We have 468 net acres in Township 19 North Range 50 east and have an offer of $50 per acre from Petro Hunt with a 1/8% Royalty for 5 years. We haven’t been in the area for many years and were a bit shocked by the amount until we started to investigate. The bottom line we are now confused by everything we have read about auctions and rumors of amounts of everything from $200-$300 all the way up to $1,500 an acre. We haven’t had an offer for over 10 years and really have no way of knowing whether the landman’s offer is remotely fair. Maybe we should just hold off? Would like some input from others in the area.

John: We received an offer from Transcontinent recently (& have not signed the contract yet) for $100 per acre and 17% for 5 years. I posted something below but no answer. As I said, we feel that we have been lowballed but are trying to get in touch with TCO now to negotiate but no call back from the landman who contacted us.

That's our story, and can I ask where you found out about the $200-300 to 1500 figures. A freind in the oil business in Midland TX told us that we should be getting somewhere in those areas for this hot part of Dawson County.

Thanks!

Well, first of all your offer is double the one we got and the Royalty is significantly higher. I found the 200+ figures from a number of sources. The State auction results on 9/6 (of course those were for 10 years). Some of the higher numbers I know are right in the area they have drilled and discovered. Up in Richland they are getting very high numbers. I talked to a landman who did some family work for us a year ago. He said that any guidance really depended on a number of factors but did say that a year or 2 ago he would have advised jumping on the $50 offer but everything now is in great flux and he is surprised at the offers. He did say that the 1/8 Royalty we were offered was a low ball. We were thinking that if we had your offer we would probably go for it. The 17% Royalty offer would be the kicker for us.

Jim Sheridan said:

John: We received an offer from Transcontinent recently (& have not signed the contract yet) for $100 per acre and 17% for 5 years. I posted something below but no answer. As I said, we feel that we have been lowballed but are trying to get in touch with TCO now to negotiate but no call back from the landman who contacted us.

That's our story, and can I ask where you found out about the $200-300 to 1500 figures. A freind in the oil business in Midland TX told us that we should be getting somewhere in those areas for this hot part of Dawson County.

Thanks!



John Johnson said:

Well, first of all your offer is double the one we got and the Royalty is significantly higher. I found the $200+ figures from a number of sources. The State auction results on 9/6 (of course those were for 10 years). Some of the higher numbers I know are right in the area they have drilled and discovered. Up in Richland they are getting very high numbers. I talked to a landman who did some family work for us a year ago. He said that any $ guidance really depended on a number of factors but did say that a year or 2 ago he would have advised jumping on the $50 offer but everything now is in great flux and he is surprised at the offers. He did say that the 1/8 Royalty we were offered was a low ball. We were thinking that if we had your offer we would probably go for it. The 17% Royalty offer would be the kicker for us.

Jim Sheridan said:

John: We received an offer from Transcontinent recently (& have not signed the contract yet) for $100 per acre and 17% for 5 years. I posted something below but no answer. As I said, we feel that we have been lowballed but are trying to get in touch with TCO now to negotiate but no call back from the landman who contacted us.

That's our story, and can I ask where you found out about the $200-300 to 1500 figures. A freind in the oil business in Midland TX told us that we should be getting somewhere in those areas for this hot part of Dawson County.

Thanks!

We had contacted Petro Hunt and told them we weren’t really interested in their offer of $50 with a 1/8th Royalty. Rep. said he would get back to us. He hasn’t. We haven’t had any activity for well over 10 years and instead of having the property locked up for 5 years we have decided to reject the offer and just wait like we have for the last 70 years.

John Johnson said:



John Johnson said:
Well, first of all your offer is double the one we got and the Royalty is significantly higher. I found the $200+ figures from a number of sources. The State auction results on 9/6 (of course those were for 10 years). Some of the higher numbers I know are right in the area they have drilled and discovered. Up in Richland they are getting very high numbers. I talked to a landman who did some family work for us a year ago. He said that any $ guidance really depended on a number of factors but did say that a year or 2 ago he would have advised jumping on the $50 offer but everything now is in great flux and he is surprised at the offers. He did say that the 1/8 Royalty we were offered was a low ball. We were thinking that if we had your offer we would probably go for it. The 17% Royalty offer would be the kicker for us.

Jim Sheridan said:

John: We received an offer from Transcontinent recently (& have not signed the contract yet) for $100 per acre and 17% for 5 years. I posted something below but no answer. As I said, we feel that we have been lowballed but are trying to get in touch with TCO now to negotiate but no call back from the landman who contacted us.

That's our story, and can I ask where you found out about the $200-300 to 1500 figures. A freind in the oil business in Midland TX told us that we should be getting somewhere in those areas for this hot part of Dawson County.

Thanks!