Offer to Lease Blk 34 Section 75, Fair for my Location?

Today I’ve been contacted about leasing our 78.75 NMA in Blk 34 Section 75 and was just wondering if anyone can tell me if what’s being offered is fair. We’ve been offered 750 Nma with 20% royalty. He didn’t stipulate any term /time lease. He did indicate that they have completed title work, done due diligence and can move quickly. Any insights?

It sounds like there is probably a lot left on the table with that offer, both from a royalty and a bonus perspective. You might consider reaching out to the forum sponsors to see what lease prices they're seeing in that area.

At the very least, you should be at a quarter royalty.

Best of luck!

First tell the landman that you will not respond to any offer that is not in writing and specifies term, royalty, depths, lease form, etc. Ask who he is representing. You do not want to have anyone claim that you agreed to terms based on verbal conversation. Second, royalty rate should be 25% in Ward County. 3 year term with no option period is most common. Third, bonus depends on whether you are leasing only shallow depths (Delaware Mountain Group) or if it include the Bone Spring and Wolfcamp formations.

Good advice from both. My property is West of yours.

I have had written offers to lease from $5000-6000 per nma. Your offer is a low ball trying to steel your lease and will then sell to an oil company for large dollar amounts. Don't do anything without an attorney representing you as there are more lease concerns in a contract than what a landman will present you, don't sign any documents from the interested party. You have heard of people flipping house for profit, that is what these low ball offer are trying to do to your mineral rights.

There have been many comments in this forum about minerals, etc,, you should go back several pages and read what has been discussed maybe a year or two.

3 year lease, no option and 25% royalty. Also new leases are being negotiated by field formation. Don't give a total depth lease "from the surface of the earth to middle earth or you will give up valuable mineral rights. Current leasing in my area is for the Wolf Camp formation.

Have an attorney to recommend for our family?

Tony, this is Linton. Don’t know if you remember me. I used Wade Caldwell, a member of this forum. He’s top notch. He can probably get you the lease bonus (and everything else) you deserve. Good luck!!

Well, we just took a jump yesterday afternoon with another landmen calling to offer $2,500 NMA, 25% royalty, 3 year term. I asked about formations, He said anyone interested in our location would want rights to both Bone Spring and Wolfcamp. He said he would put together an offer letter and send it today. Guess I’ll wait and see.

We’ve only been through this process one other time 17 years ago, didn’t even realize we held the mineral rights due to inheritance, and would like to make a little more informed decision about our lease this time.

This offer is a considerable increase from the first, and with Mike East mentioning $5-6K per NMA in some areas, it seems worth investigating and knowing what we have. Like anything else, I’m sure Its real worth is based on location, timing, and whatever someone else is willing to pay.

If he does come through with an offer in writing, probably best to have an attorney look at it for us.

Thanks to all!

Don't rush it as there will be more offers. My attorney advises to wait and see. Also Tell the landman his offer is quite low and see what he does. Mention you have much higher offers, the 5K or 6K per nma and see what they do. Tell anyone you deal with that your attorney will advise you on final decisions before any documents are signed. The leases presented to me were for the Wolfcamp field only so the Bone springs should be worth more. Lease them "EACH" not together if you can? Keep all minerals below Wolfcamp. I have also had offers to purchase all the mineral rights at $21,000 per nma in writing. The landman will pressure you for a decision, I told most of them it would take me 60 to 90 days of research before a decision would be made, I am still working on it.

Do not quote bonus offers that you have not received. You can tell landman that you consider the bonus to be low. Bonus is not uniform throughout the county. I think that you need to look at this very carefully. Endeavor is operating the Kellison Unit on Section 75, Block 34 and reported 37 mcf in February 2017. Volumes for last 12 months were a total of 1,032 mcf which does not look economic. Are you being paid royalties on this unit?

No, we own no royalty. They were severed years ago. Which makes all this a mess. Every so often, we are contacted by someone, ( has happened a number of times ) then only disappointment when it comes right down to it. Endeavor went a long stretch reporting no production, still im sure they will want to claim we are HBP.

Obviously, we know little of the oil business. It can be not only confusing, but from my experience, causes you to become quite distrustful.

In the end, i realize any offer will have to be in writing and will come only if in fact we are not HBP by our previous lease. I can’t help it if my phone rings and or, I receive emails with someone offering money to lease my minerals. You’d think they would know what they are talking about and would have done THEIR research as to whether or not what they’re offering to lease is even truly available.

Sometimes, what we’ve experienced just doesn’t make a whole lot of sense. You’d think these professional landmen would be better informed and not wast their time or ours.

Sounds interesting. I think we’d be foolish to not at least consider every offer. Thank you.