Stephens County Oil & Gas lease offers

Would like any comments or advice on two recent lease offers received on Sec 17 Township 1S, Range 4W.

One came from a broker NOT representing a driller. My thought is probably looking to flip the lease. Offered a 3 year, 3/16 royalty, $1252/acre. Royalty would be on net proceeds, also a depth clause of 100 ft. below stratigraphic equivalent of the deepest depth penetrated.

Second offer representing Continental Resourses is a 3 yr. term, 3/16 at $1250/acre and 2 yr. extension at 125%/acre bonus consideration. Also comes with depth clause.

My feeling is that I am not real happy with a flipper but like his 3 yr. term as things in the industry may be looking up. Thinking of asking for 1/4 royalty at $2000/acre and go for gross proceeds and eliminating the depth clause.

On second offer, I'd reject 2 year extension, ask $2000/acre and drop depth clause or specify the deepest perforation in the well from which it is producing.

Appreciate hearing comments/advice from anyone in Stephens County.

Those offers are much higher than they were a couple of years ago. You are smart to not accept the extension. Do not accept any post production charges, no "enhancement" language, no nothing. You should ask what the offers are for 1/5th as well as 1/4th. You usually do not get much bonus for 1/4th, but the royalty usually makes up for it in the long run. Depth producing is important instead of penetrated. Definitely keep the detpth clause, especially on that anticline. You also need to limit the shut in time to two years cumulative, not consecutive and have a commencement of drilling clause. Friend me with the blue icon if you want a copy of one.

M Barnes: Many thanks for your reply and advice,it's much appreciated. Yes, I would like a copy of the commencement of drilling clause and if you may have any good depth clause wording it would also be helpful since much of my research has many different variations of this clause. Some of the leases my mother has entered into in the past have not been totally to her benefit but now, as a joint owner with her, I am trying to negotiate something a little more beneficial to us. Things and wording can get a little confusing. Thank you for any thoughts.

I am not certain what the concern with the non operating lessee seems to be. They may be flipping it or they may simply be an outside investor attempting to buy some working interest in a play. If their offer is better and they have the funds available, I would consider taking their offer. You will find they can be more amiable to generous lease terms.

If the only ones making lease offers were those interested in operating, your lease offers would be significantly reduced in value as there would be no market competition. The more competition in a market place the better the outcome will be for the mineral owners.


I'm very interested to learn of some activity in 1S-4W. I have interests in Sec 9, 10, 11, 15 and 27. I will be sure to follow this discussion. Thanks for posting about it!