Kurt:
From the information that was provided, the following is my opinion of this offer: 1) The royalty appears low as I would ask 20% 2) The bonus/acre appears low......In May 2011 (State Mineral Auction), Titan Resources was the successful bidder on acreage in T161;R102 at $1800 and $1500/acre. Keep in mind, the bonuses paid at State Auctions are generally higher than the amount you will recieve and the lease is for a five year period. 3) I would not consider leasing for more than 3 years. The five year lease is too long as many things can change in the area over an additional 2 year period. Looking at your area on the GIS map, there is well permitted on the Section just North of your area but appears widespread drilling has not yet occurred in the area. One problem with your lease is the small amount of net acreage you possess as the more acreage owned will sometimes put you in a better negotiating position. Finally, do your homework about the contents of an oil and gas lease, all of which can be found on this website. Hope this information helps.