Good morning I am new to the forum. I currently received a lease offer from Antero Resources for leasing 37 gross acres and net 0.08326 net mineral acres. Offer is $300 bonus and 15% royalties.
How do I know what to counter?
Hi @SKK they are saying that you only own 0.08326 of a mineral acre. The $300 signing bonus is due to the size of your parcel and is pretty much the minimum they will offer. You can ask for 18% royalty without deductions, but Antero is not offering leases without deductions any longer. They will not sign anything unless you pay a portion of the transportation fee’s. Just being realistic, you don’t have much to negotiate with.
Thank you very much.
The bonus isn’t as important as the royalty rate, especially with a small interest. I would however, recommend you push for at least an 18% royalty rate.
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That offer is bottom line. You have a small interest so it’s hard to bargain unless you are sitting on a “Motherload” tract that the company needs to finish their wells. Best i can give you is do lots of reading and lots of research. You can drive yourself crazy with this mineral rights stuff. Nancy Mosley and myself can attest to all the work that can be put into leasing and such. There are some knowledgeable folks on here that can help. Listen and learn. The percentage of royalty should be in the neighborhood of 18 to 20 percent. Gross at the well head cuts out all the post production cost that eat up your share of the royalty. Thats what we settled on. There are items in the lease that should be deleted and some that should be added. This info pertains to everyone dealing with a company wanting to lease your mineral rights. There will be those that contribute on here that will give you some of those items. I am presently retired from the mineral stuff because i get frustrated and a headache when i think about Antero. Lol
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Do we ever see any royalty payments? Thats the question I cant get answered
Should I ask for **free from the costs related to production” including taxes”?
Can you share if there are other small print I should be sure is included?
Thank you!
You can ask for no costs, including taxes; no warranty of title, and no right of first refusal for sale. See what you get. Also research the WV Co-tenancy laws, and forced pooling. There are some good terms in there for those who do not lease but get forced into one. Or consult an attorney. Remember free advice not necessarily worth anything!
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Tyvm! So appreciated
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What is the big difference between “Gross Reduction Clause” and “Wellhead Royalty - No Deductions”.
I thought I had it figured out until I spoke with the landman again.
Any help is so much appreciated.
I would recommend having a lawyer look over any contracts BEFORE you agree and/or sign anything. There are some who post here. I have used Kyle Nuttall 304-473-1403. He has been very helpful.
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Can you elaborate on the “Gross Reduction Clause”?. Wellhead Royalty means you would not be paid on NGLs but instead you are paid based on the BTU factor of the gas coming out at the wellhead. In theory, it should be similar but depends on downstream contracts, etc the operator has and how efficiently they are transporting the gas to market.
The landman sent me these 2 options to review to add to the lease:
- Gross Proceeds Clause Lessee shall pay Lessor a royalty on gas at the agreed upon royalty rate based on the value of the unprocessed gas*** produced from each and every well on the Leased Premises, or on lands pooled or unitized therewith, calculated by multiplying (i) the MMbtu equivalent of the gross volume of gas metered at or near the wellhead in a given calendar month and (ii) the first of the month index price for Eastern Gas-South, or a successor publication (the “Index Price”). Lessor and Lessee agree that the gas royalty is being calculated prior to processing and extraction of natural gas liquids or other byproducts from the gas stream and that no additional royalty is due for the value, if any, of natural gas liquids or other byproducts contained in the gas stream. It is further agreed between Lessor and Lessee that all royalties accruing to the Lessor under this Lease shall be made without deduction, directly or indirectly, for the cost of drilling, testing, completing, producing, gathering, transporting, dehydrating, separating, stabilizing, processing, and marketing the oil and/or gas produced hereunder. Lessor agrees, however, that Lessee may deduct from such royalty payments Lessor’s same proportionate share of all production, petroleum excise and severance taxes.*
In the event the Index Price is not available at any time or for any reason, Lessee may select, in good faith and in a commercially reasonable manner, a replacement monthly index price determined by Lessee to reflect sales to unaffiliated third-party purchasers at locations in the geographic area in which the Leased Premises are located.
- Wellhead Royalty – No Deductions
It is agreed between the Lessor and Lessee that, notwithstanding any language herein to the contrary, royalties payable on gas shall be based upon Lessor’s proportionate share of the gas produced from the Leased Premises at the royalty rate provided herein and is calculated by multiplying the (i) MMBtu content of the gas produced from the Leased Premises, measured by a meter at or near the wellhead, by (ii) Lessee’s weighted average sales price for gas sold from the same field during the given calendar month (“WASP”) free and clear of all costs or deductions for exploration, drilling, development, operation, production, separating, treating, dehydrating, gathering, storing, compressing, transporting and marketing such gas. For the avoidance of doubt, Lessor and Lessee expressly agree that the royalty is calculated based on the MMBtu content of the gas measured prior to processing and fractionation and Lessor will not receive an additional payment for any natural gas liquids extracted, processed, and created from the gas produced from the Leased Premises, if any.
I do not like either of these. I was looking for Royalties based on 3rd party sale and NO deductions. I have this in another lease from few yrs back (different) site.
Thoughts on if I should discuss this with the current landman? Thanks Steph