I am curious in the type of bonus payments being paid on mineral leases in Reeves County. I own a small parcel in Section 10, Block 58, PSL Survey and have been contacted by several landmen with lease offers ranging from $2500 to $3000 per acre. I have seen others with similar acreage receiving up to $5000 per acre offers. Before I agree to a lease I wanted to have a some certainty I am getting a reasonable price and am dealing with a company that plans to explore/produce rather than just turn around and sell my lease at a profit to them. Thanks for any and all input...your help is appreciated.
There are a number of ways to make sure you get "top dollar" and can increase the probability of development. One way I have seen done in the past is to agree with a landowner on a price, then share in the mark-up (e.g. if you agree to lease to a landman at $4000/acre, you all will split anything over that amount when he/she flips it). The development part is trickier. You can agree to a smaller royalty rate in exchange for a shorter term (say, a 20% lease for a 6 month lease) which will definitely entice the developer (they get more NRI and have a very short time frame to get it done) or you can have someone do research of which operators are in that area and try to lease directly to them; the problem there is since you are a minority parcel, you may not get as much since the other interests would have to be leased as well. Let me know if you would like any help!
Good information. Thanks.
Daniel, have you contacted Drew Reid at GLO. Since you have PSL they will tell you a bottom $$ amount that they will accept and an amount they would like you to accept since the State gets half.
Thanks. I am in the early stages of gathering info. I appreciate your input.
Actually, the PSL is Relinquishment property, which means the State owns 100% of the minerals, and the surface owner gets 50% to act as agent. Kenneth has a great suggestion of calling Drew Reid. I have called him on a number of occasions and he is very helpful. He is also a good back stop if you were to accept a $3500 offer and it was too low, you would be the proud recipient of another check after the State turned down the lease. They are not helpful about the flips, which burns me, too. But they do know who the operators are and who are simply landmen. I have a lot of property in Reeves County in the area but all under lease and only a few on the market now, but I won't lease them under $4500 to $5000, plus using a variation of the GLO lease to have a no cost clause. Be careful to use the current form, because the immediately prior form had that cost free portion declared as "surplus language" by the Texas Supreme Court (surprisingly, back in 1995 or so). State didn't change their language until 2015. good luck and please post back what you find out.
Thanks. I sent Drew Reid an email and will contact him tomorrow. Your insight has been very interesting and I appreciate your help.
Go ahead and ask for it,$4500 /acre ! the worst that can happen is they say No ,but how about 4?