Section 19 Block 26 $2500 Per acre bonus, 1/5 royalty and a 5-yr term. Seems low but maybe the big stuff is to the west of this?
This is one person’s opinion.
Section 19 lies in the transition from the Central Basin Platform / CBP (to the east) and the Delaware Basin (to the west).
The one well drilled in this section is significant - a 21,000’ vertical well drilled in 1975 (Felmont Oil Corp #1) that was completed in the Wolfcamp section around 13,000’. Only produced about 1 BCF and 11 MBC.
Log for this well shows the section in the Wolfcamp (and perhaps the upper Penn) to be CBP in nature while the deep section has some very good-looking Woodford and/or Barnett section. These are prime Hz drilling targets.
In my opinion, the bonus number is OK, but the 20% royalty is light. If you are dealing with a broker, they will take this acreage and flip it to an operator for a 75% NRI and retain the difference (in this case, 5%) as an override for the broker.
You should at least look to get 22.5% royalty - but 25% would be ideal (but could kill the negotiation).
Just as important is the need for an iron clad cost free lease to avoid future deductions tied to various production, marketing, processing, etc. expenses.
Get a good O&G lawyer
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I remember the Felmont well. I have some of the logs run by SLB as we had a small WI in it. I appreciate the insight and will post if anything happens with this.