Section 9-12N-7W

We received a letter from Haggard Land company and Camino about leasing our rights. This is all pretty new to us.

Their offer is to lease our minerals at $1,000 per net acre at 1/5th royalty. We are believed to own 0.45 acre so our bonus payment would be $450 a long with royalties. Does this sound accurate or fair?

thanks

No recent poolings around you to compare with. I have found that early offers are usually low to final offers, so I always ask for more or stall for a while to see if I get other offers. The bonus is not the most important thing. The terms of the lease are much more important and will need to be negotiated. If you are new, I suggest reading the Mineral Help tab above and a nice post on “Inexperienced owners” for tips. INFORMATION FOR INEXPERIENCED ROYALTY OWNERS

First of all, The Mineral Rights Forum is a great help! Second, I recently received a mineral rights offer from Camino and I’m in Section 9 -12N-7W. I’ve spent all afternoon going over the info provided herein and other recommended sites also. As much as I’ve learned, I still don’t know whether to sign the agreement or not. I do know that I don’t want to extend it beyond 3 years, therefore, I will delete the last paragraph. If I hear from you SOON, maybe we can share some info that would be mutually beneficial.

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I am assuming you are talking about a lease. You probably don’t want to sign in its original form. Does is have gross royalty or does it say “net”? Does it have post production charges listed such as compression, transportation, marketing, etc. Then don’t sign. Does it limit the shut in time? (Needs it) Does it have a depth clause? (Needs it) Does it have a commencement of drilling clause?(Needs it) Does it have an option to extend? (Don’t sign) Does it have a top lease clause? (Don’t sign). Not giving legal advice. Just mentioning the things you need to watch out for.

First, I made an error, it’s in Section 4, not 9. As per your information, the Mineral Lease evidently has every item I don’t want and none of the items I do want. Not signing it. The Well Proposal letter has 6 participation Options. The agreement states that “if I elect to participate under this letter, I must also elect in writing to participate pursuant to the terms of the Force Pooling Order to issue.”

  1. Therefore, why sign it, if they can ultimately have the choice between what I choose and the Pooling Order? They obviously will take the one they want anyway, especially since I want the highest participation %.
  2. Also, the options are stated as “net revenue interest”. I assume it would be best to have “gross”?

An oil drilling company wants to place a pad on my land. They want to “lease” it. I get the tax ramification vs the two, but that’s it. Any info would be appreciated.

Thank you so much!

THANK YOU!!!

The mineral lease and the surface lease should be two different leases. I never sign those intent to drill letters. They are just pro forma. I would prefer a 1/5th to 1/4th royalty. (net revenue interest), the operator gets the rest.
You want a gross proceeds lease which means no post production charges. Slightly different issue, so don’t confuse the two.

If they want to lease your surface for a pad, you really need to get a good lawyer involved and make sure it is on a different lease. Entirely different concerns involved in the surface lease. That lawyer can also help you with the mineral lease.