Hello, I just got an offer today from Ethion Energy in St. Augustine County. My survey is 1:39. They offered me 22% royalty and $300 bonus money. Can anybody tell me if this is in line?
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Hello, I received an offer from Aethon 3 days ago for one of my San Augustine properties. It started at $500 per acre and negotiated to $1,000 per acre. The royalty amount was only 20%. I asked for 22% and got declined. Your offer of 22% has me hesitant to sign for 20%. Thanks for sharing.
Can’t guarantee it applies here but there can be a relationship between the bonus and royalty percentage a company will pay. If you are comparing only to the offer described in the original post above, they were getting 22% but only $300 acre bonus, and you said you’ve negotiated the bonus up to $1K.
You’d need to decide which factor is more important to you but you could ask the royalty they’d agree to for a lower bonus.
Keep in mind other things beside bonus and royalty percentage can be significant. What lease term are you talking about, does it include a cost-free royalty clause, pugh clause, depth clause? There will be tradeoffs on what you can work out and the number of mineral acres you control can impact your negotiating leverage. Try to find out what other folks in your direct vicinity are being offered and see if they’d be willing to negotiate as a group. Takes effort but sometimes worth it.
Both horizontal and vertical pugh clauses included. Cost-free 20% royalty. Waiting on draft copy to drill deeper. I feel it’s a competitive offer but researching what others have negotiated. We got $5k per acre with 22% royalty the last time leased. Of course, natural gas has lost 80% of value since 2008.
Would be very wise to get a good oil and gas attorney to review the draft leases. Most are not mineral friendly and need careful edits.
Predictions are for gas prices to increase in the next couple of years.
Yes, I intend to have an oil and gas attorney look at drafts. It’s very exciting to have interest in my Haynesville Shale minerals again.
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