My mom inherited mineral rights (25%) years ago for 300 acres in Laramie County. She received an offer from HERCO, LLC of $50/NMA for a FIVE year PAID-UP exploration lease with the option to extend lease for THREE additional years by a payment of $50 NMA. The lease provides a proportional 14% royalty should they discover and produce oil and/or gas. This is all new to us and we don’t know if this is a good deal or not? Any help would be appreciated. I don’t know if this information would be helpful but this is on the letterhead: TOWNSHIP 18 NORTH,RANGE 67 WEST OF THE 6th P.M. Section 06: Lots 1(35.19), 2(36.57), S2NE, SE Thanks again for any advice.
I do not know Wyoming as far as prices go, but I never do an extension. Too much can happen in five years, let alone eight. I prefer a three year lease or shorter if drilling is in the area. The clauses in the lease are much more important than the bonus. Most first drafts of a lease are all in the company favor and not the mineral owner. They can be negotiated!
Thanks for the information and it makes good sense to me as well. Will pass on to my mom
while most people say they don’t like extensions, some don’t always have as many options. In your area, there isn’t much going on at all. So a lot of companies will simply walk away if they aren’t given the option. While its certainly ok to counter, don’t be surprised if they say no. If your minerals were in a highly sought after area, it would be a different story and you could easy get away with higher price per acre, better royalty, and better leasing terms. Unfortunately, the area you mentioned is pretty far outside core areas of Laramie. I would certainly counter that 14% though, they can surely do better than that.
Thanks for the information. You’ve given me a lot to think about and I certainly wouldn’t want my mom to lose out completely. Would 20% be reasonable to ask for a royalty?
Hi Trudi, Our family was recently contacted by an oil company for a lease on our mineral rights that are located in Campbell County. After some research and visiting with my Aunt is who also an heir of the mineral rights the offer of $75 per acre on a 5 year lease with option to extend and 16% royalties, I made a counter offer…we are still waiting on a reply. My Aunt who is very knowledgeable and experienced with this as when the “methane” boom in our area years ago the mineral rights were leased and the family did quite well. She advised not to lease the rights for less than $125 an acre, a 3 year lease with option to renew and a minimum of 16% royalties so we are shooting for $200 an acre, the 3 year lease and 20% royalties. Hope you find this helpful…God Bless