So I just got a lease offer

My grandparents owned just under 20 acres in Henderson County and sold it in 2004. They maintained 100% of the mineral rights, however. The land is located in the B.C. Walters survey, A-797. Well, my grandmother just got an offer from a landman representing BROGO Minerals, LLC. They'd like to lease the rights for three (3) years, paying a $150/acre bonus and one-sixth (1/6) royalty.

She has given me the reigns on figuring out what to do. I'm wanting to get a fair price for the rights because as we all know, once the valuables in there are gone, they're gone forever. What should I counter offer with? Is this area potentially productive?

Andrew, the bonus is in line with this economy. You can always ask for more but the real money is in the royalty. Don't take less than a 1/4 royalty. The bonus money is just that a bit of money. The royalty is where the real money is.


I will agree with Carran. Considering the energy market and also the small acreage, you don't have much bargaining power for a larger bonus per acre. And the 1/4 royalty is in line also. The area where your minerals are located is in the Northern edge of the City of Athens, Texas. In A-797 there have been several dry holes drilled in the past. There is also a plugged well or two. There is also a producing gas well(30966) that was drilled in Nov. 2008 and is producing from the Cotton Valley Formation. The Cotton Valley Formation is a prolific formation for East Texas. Also next door to the north in A-332 and A-776 are producing gas wells(30968/30990) that was drilled in Jan. and Feb. 2009 and producing from the Cotton Valley Formation. There are also other producing wells in the area. These are not great wells but they keep producing for several years. So there is production in the area of your minerals.

GIS Map of Henderson County A-797:

Clint Liles

Thanks for the feedback, guys. I'll counter offer with 1/4 royalties. Is there anything in the contract I should look for, good or bad?


Post Production Costs or Deductions

For sure in a lease where there is gas involved ask for(and make sure it is in the lease) No Post Production Costs or Deductions. Post production cost are whats called processing, gathering, treating, compressing, dehydrating, transporting and marketing or otherwise making such gas or other substances ready for sale.

Clint Liles

Thanks, Clint. I'll read over every detail tonight and make a counter in the morning.

We have a lease request and are negotiating. They say they will not put such words in the lease ? That we are getting a good deal. We are in Henderson County as well, just north of Athens. Is it unreasonable to ask ?

Sounds like you are talking to the group that is probably leasing for OBENCO - who have been chasing a horizontal Rodessa program along the Henderson / Anderson County line (mostly on the Henderson side).

From personal experience, I received royalty payments from some Eagle Ford production from a major EF operator. About 20% of my gross revenue is deducted for transmission, processing and related post production charges.

In some areas and plays, the deductions can be a much higher percentage of the gross revenues


The O'Benco wells are S/E of Athens. The oil field north of Athens is being explored into the Rodessa B, C, and D formation as well as the Cotton Valley.

Mr. Palmer what is the Abstract # of your minerals acreage?

Clint Liles


I believe that OBENCO is looking to extend their horizontal Rodessa play north into this area

That's great Rockman. O'Benco seems to had good luck S/E of Athens. I'm sure the mineral owners North of Athens won't mind.

Clint Liles

Clint it is A-829 whitehead survey

Brown, godwin and company or BROGO minerals


To the north of your minerals TDX Energy has a permitted location for a Horizontal well(API 213-31089);jsessionid=lT6BXLqBKnZ15pQFcvQQp22dNTjNyvhJ3MZsvYm7G5R0hdP125mD!1972927289?fromPublicQuery=Y&name=BEECHER-COX&univDocNo=490146937 I'm not sure this well has been drilled yet.

To the North and Northwest of your minerals there are several older vertical wells that were drilled in the early 1980's that are still producing from the Rodessa B & D formations.

Well 30284 was originally completed as a gas well into the Cotton Valley formation in April 1981/permitted for 12, 500'/Recompleted to Rodessa D formation Oct. 1981(status:producing)

Well 30617/oil well/completed Nov. 1988/Rodessa B formation/permitted for 8,800'(status:producing)

Well 30940/oil well/completed Nov. 2007/Rodessa B formation/permitted for 8,800'/(status:producing)

Well 30276/gas well/Cotton Valley formation/permitted to 12,500'////Recompletion to oil well May 1981/Rodessa B(status producing)

GIS Map of Henderson County A-829 and surrounding area:


Clint Liles

There was just a well drilled at or near the location of the north end of the line from the underlined number. So I am guessing it's horizontal and the well head is to the North end of the line ? I asked the BOGO mineral people to ad the line of " no after production cost " and they said they would not do that ? any opinion on that ? I thank you so much for your work on here. I have learned a lot.

If they say 'no after production cost I would say 'no lease'. There is no use in giving them 10 to 20% of your royalty check for making the product ready for market.

What percentage of royalty were they offering?

Clint Liles

G. D.,

The Horizontal well (31089) to the north of your minerals was spud(begin drilling)on July 20, 2016. I find no Completion Report or Production data.

Clint Liles

We negotiated to 1/5 they started out at 1/8 , we asked for 1/4 and they said no. I did have them put in a clause for shut in wells not to extend the lease past 2 years on a 3 year lease. But I haven't gotten back with them or signed a contact.

To me their reply has been alittle rude. I am in the retail business and you are polite to your customers. They ask questions , you answer respectfully.

Thank you for your input

I really appreciate your info. They say it is for oil and Gas . Can those be on one lease together. I thought the Gas and oil leases were different size tracts ?

Thank You again,


G. D.,

It's normal to drill an oil well and there be gas in the formation. That's great. More production means more money in your pocket.......or drill a gas well and oil show up. If the pressure is great enough from the gas it can be a flowing well and no pump jack or gas lift is needed.

Clint Liles