I have been offered a BONUS: $400.00 per mineral acre ROYALTY: 1/4 (25%) TERM: Three (3) year primary term with a two (2) year option. The option lies with the company. In the event the option is exercised, I will receive an additional bonus check in the amount of $400.00 per mineral acre.
I was told by the landman that this is there top offer. Does this sound like a fair deal ?
I check the Midland county group here , and didn't find anything. Does anyone know what the rates are going for in Midland county right now ? or how I could find out ?
Lacy, you need to be dealing with more than 1 oil co. If you deal with 1 landman only, he can make an offer and wait you out, he won’t worry about another landman/company leasing your acres, he doesn’t need to. The landmans job is to get you to sign cheap, and will stick at that offer if there is no competition. Ms. Reagan is right that there should not be an extention, but a first right of refusal. 25% is a pretty good royalty. Watch the production costs and deductions. Oil lease is like a new car contract sometimes, they try to make more money on the back side of the deal after the bonus and royalty are set. You need competing offers and look at terms for deductions, shut in time and amount of shut in payment, grace period to commence reworking or new drilling if production should cease, 90 days would be ok, 60 days would be better, 1 year definitely not. You also want pugh clauses in the lease. You can learn more about all this after you get some competing offers. Unless you get a dry hole, I think the terms will be more important than up front bonus. You might check the county groups for information. Good luck, and let us know how things go.
Thanks Laura and r w for responding , I do appreciate it !
The landman did send me a copy of the lease to look over , but I do not understand it. I inherited mineral rights and I have been getting checks over the years. All I have ever gotten was division orders to sign, I never had anything like this come up before. So I wouldn't even know anything about ,options , first right of refusal , shut in time , pugh clauses , and so on. I am just worried being I know nothing about all this that I might get taken advantage of. That's why I came here looking for help with this , and I would appreciate any help I could get.
I did check the county groups here and it doesn't seem to have any active members in the Midland county. Does anyone know where I might could find out what the rates are in Midland County ?