Can anybody give me an idea of a fair amount per acre for an oil and gas lease in Reeves County, TX?
Depending on the specific location: $450 to $1500 for a 3-yr with 25% royalty is what we’ve been offered. $450 is too low and we won’t be accepting that – seems to be a low-ball offer.
Hi I have 40 ac la salle texas abstract A-585 , **EOG First offer~ $600-fist 3 Yr / $450-2yr extin /20% royalty**
after one phone call to the landmen at EOG , **EOG offerd~ $750-fist 3 Yr / $750-2yr extin /maybe 25% royalty*.
The area has one well 1.5 mile to the north and two wells 1.2 miles south all three wells are less than 2 months old i have no data on production with the ccr yet . hope this helps you.
kelly
Does anyone know the names and contact info of some of the landmen they have dealt with? Any and all help would be greatly appreciated. Thanks.
Kelly Taylor said:
Hi I have 40 ac la salle texas abstract A-585 , **EOG First offer~ $600-fist 3 Yr / $450-2yr extin /20% royalty**
after one phone call to the landmen at EOG , **EOG offerd~ $750-fist 3 Yr / $750-2yr extin /maybe 25% royalty*.
The area has one well 1.5 mile to the north and two wells 1.2 miles south all three wells are less than 2 months old i have no data on production with the ccr yet . hope this helps you.
kelly
Our family has 120 a. in section 220 reeves county,texas offered 650.00 net a.1/4 royality.3 year term with option 2 years extention with same signing bonus offer. jan. 2011 offer by clayton williams oil co
PHYLLIS A TIMS said:
We were offered $400.00 per acre 1/5 royalty 3 yr primary term with option to extend 2yrs for an additional $400.00 Reeves County In Aug 2010 We turned it down. Any one had any offers lately?
douglas pickard said:
Our family has 120 a. in section 220 reeves county,texas offered 650.00 net a.1/4 royality.3 year term with option 2 years extention with same signing bonus offer. jan. 2011 offer by clayton williams oil co
Julia Watters said:
PHYLLIS A TIMS said:We were offered $400.00 per acre 1/5 royalty 3 yr primary term with option to extend 2yrs for an additional $400.00 Reeves County In Aug 2010 We turned it down. Any one had any offers lately?Thanks. We have had an offer for $800 an acre and 23% royalty. I think we are going to wait for a better offer.
Julia Watters said:
Thanks for the information.
douglas pickard said:Our family has 120 a. in section 220 reeves county,texas offered 650.00 net a.1/4 royality.3 year term with option 2 years extention with same signing bonus offer. jan. 2011 offer by clayton williams oil co
Glad we waited. Accepted offer of $1400/acre for 3-yr primary plus option for 2-yr extension (also at $1400) with a 25% royalty rate. We also inserted a strong Pugh clause that releases non-producing zones (shallow and deep) as well as non-unitized geographical areas.
M A Smith said:
Depending on the specific location: $450 to $1500 for a 3-yr with 25% royalty is what we've been offered. $450 is too low and we won't be accepting that -- seems to be a low-ball offer.
M A, $1400 is higher than what I've got. so you've done something right in the negotation process. we're located around toyah. I've got an oral offer of $1000/acre after being PATIENT. Origianlly, the offers were 1/10th of that! this begs the question: is the $1000 offer a some fraction of what their really willing to pay top dollar. i bet it is. also, I feel the landman thinks I am a hayseed and that I can't use the computer.
Any negotiation tips on how to get to a top dollar offer?
It sounds like being patient really helped you alot.
i figure its just supply and demand really. if a landman has a mandate to buy up as many acres as possible, and he can't do it becuase the mineral owners have gotten word that the studies are better than expected, then he has to bump up his bonus offer to clear the market.
You know, the landmen ive talked with always say as part of their sales pitch that the real money is in production. i feel this is very, very misleading when bonus money can make you a millioare over night! plus, i hear only 10% of wells actually produdce. they dangle the dollar figures infront of us and exept us to act like pigs to the trough when in actuallity they could go higher. i feel this way becuase origally their sales pitch was the market can only bear 125/acre (1/10th of our present offer!); they knew or should have known that their statement was exceptionalloy misleading. there two reasons for this i figure: 1) so you ignore the bonus figure and therefore accept a smaller bonus, and 2) so you lease your minerals and they get paid. Fool me once, shame on you. fool me twice, shame on me.
in your view, do you think your offer was increased becuase you were patient or becuase of a bidding war? based on all the feed back i'm hearing, the area is hot becuase the seismic studies are probably better than expected. if its true, then that should put upward pressure on what the landmen are offering today, right now.
It seems like the floor is $1000 depending on location. the only question i have is by what multiple could offers rise by if a bidding war ensues? 2x? you know, I think a bidding war has already begun, based on all the interest in the area. Its been hot for last 6 months, and its really heated up the last few months. i figure the situation in Egypt and the suez canal should only lead to oil supply fears. plus, i fugure Isreal/Turkey issues could further them. i'm not consiratorial, but i think big oil knows this and that therefore all the smart money is going "long oil." This is also why i think a bidding war is heating up.
so, it looks like all indications are that if the mineral owners are patient, this will constrict supply in the area and force the landmen to move their offers higher to clear the market (their worst fear i figure). supply and demand of oil is really just like cattle or hay i figure.
M A Smith said:
Glad we waited. Accepted offer of $1400/acre for 3-yr primary plus option for 2-yr extension (also at $1400) with a 25% royalty rate. We also inserted a strong Pugh clause that releases non-producing zones (shallow and deep) as well as non-unitized geographical areas.
M A Smith said:Depending on the specific location: $450 to $1500 for a 3-yr with 25% royalty is what we've been offered. $450 is too low and we won't be accepting that -- seems to be a low-ball offer.
Does anyone have a name for someone at Clayton Williams?
Julia Watters said:
Julia Watters said:
Thanks for the information.
douglas pickard said:Our family has 120 a. in section 220 reeves county,texas offered 650.00 net a.1/4 royality.3 year term with option 2 years extention with same signing bonus offer. jan. 2011 offer by clayton williams oil co
M A, can you show us this strong Pugh clause so others here know what to look for?
A.K. – you are correct in saying the location is important. The type of reservoir now being produced (shale or interbedded sand/shale) with horizontal drilling makes the productive region far more widespread than years ago when the targets were deep gas plays. The price of natural gas is depressed (1:15-20) compared to its historical ratio to oil price (1:10), so oil plays like these are highly sought after. That’s why the Eagle Ford now dominates the headlines rather than the Barnett and Haynesville.
The important factors in the lease are the royalty (25% seems to be the norm today), the bonus (depends on location), the term (shorter is better – remember the extension is at the lessee’s option, not the lessor), and a vertical/horizontal Pugh clause or equivalent (very important, and I’ve never seen it refused).
A large, contiguous tract demands a higher bonus, since it makes leasing / admin much easier.
Always check with neighboring owners if you can.
A K James said:
Does anyone have a name for someone at Clayton Williams?
Julia Watters said:
erin williams direct no. 512-619-8222 please do not use my name
Julia Watters said:
Thanks for the information.
douglas pickard said:Our family has 120 a. in section 220 reeves county,texas offered 650.00 net a.1/4 royality.3 year term with option 2 years extention with same signing bonus offer. jan. 2011 offer by clayton williams oil co
The normal Pugh clause releases acreage not included in a producing unit. In addition, it releases the "deep rights", i.e., the zones more than 100 feet below the deepest depth drilled.
This doesn't account for the release shallow zones that are not being produced or for zones between the producing zone and the bottom of the well. You should ask that all non-producing zones be released, both above and below the producing zone. It should not be based on the depth of the hole, but on the zone actually being produced. Without this, the lessee has a free option on the other zones, only limited by how long he can stretch out production in the first zone.
Mineral Joe said:
M A, can you show us this strong Pugh clause so others here know what to look for?
douglas pickard said:
A K James said:Does anyone have a name for someone at Clayton Williams?
Julia Watters said:
erin williams direct no. 512-619-8222 please do not use my name
Julia Watters said:
Thanks for the information.
douglas pickard said:Our family has 120 a. in section 220 reeves county,texas offered 650.00 net a.1/4 royality.3 year term with option 2 years extention with same signing bonus offer. jan. 2011 offer by clayton williams oil coThat is weird because I did not give that name and phone number and it said Julia Watters said: I did not say that. I don't know who did.
M A,
The highest offer I've heard right now is $2k/acre for bonus. What have you heard for bonus around your area? Do you think a bidding war is happening? I've heard a bidding war is a key factor in getting a top dollar offer.
Plus, if we were patient I think the landmen could bump up their offers right now to around 2k becuase with the new year the land men have new budgets and are flush with cash, or so I've read. What are your thoughts?
M A Smith said:
A.K. -- you are correct in saying the location is important. The type of reservoir now being produced (shale or interbedded sand/shale) with horizontal drilling makes the productive region far more widespread than years ago when the targets were deep gas plays. The price of natural gas is depressed (1:15-20) compared to its historical ratio to oil price (1:10), so oil plays like these are highly sought after. That's why the Eagle Ford now dominates the headlines rather than the Barnett and Haynesville.
The important factors in the lease are the royalty (25% seems to be the norm today), the bonus (depends on location), the term (shorter is better -- remember the extension is at the lessee's option, not the lessor), and a vertical/horizontal Pugh clause or equivalent (very important, and I've never seen it refused).
A large, contiguous tract demands a higher bonus, since it makes leasing / admin much easier.
Always check with neighboring owners if you can.
This is very helpful to gain a perspective regarding lease offers in Reeves Co. I am also curious if there is anyone connected with this blog that has any property close to where my sister and I have our 80 acres. We are located in AB415 Section 69 Block 4. Any idea what kind of activity is happening in this area? I have been offerred $800 per acre with 25% rolaty for 3 yr term and will negotiate.
You might be able to get it up to $1000. $800 is a reasonable starting point but certainly not at the upper end of the range.
Just as important or even more important than boosting the lease bonus is making sure that you have a strong vertical and horizontal Pugh clause. Be sure to retain the undeveloped shallower section (after a reasonable period of time) as well as the deeper rights. Most Pugh clause (or equivalent) language does not protect the shallow rights. You'll want to isolate the zones held by production to within 100 feet of the producing zone(s)(above and below) so that the rest of the vertical column reverts back to you once exploration and development drilling have ceased. You'll also want to sever any acreage that is not part of a producing unit so that it will also revert back to you.