Surprise Valley Resources mineral leasing

Through inheritance I now am the proud owner of mineral rights on 1.5 acres in abstract 238 Leon county. I was offered $8800 to sell then negotiated to$15,000. Sun Valley has offered $500 per acre lease and 20 percent royalty which i have negotiated to 22.5 but holding out for 25. Does anyone know of any pending activity here or have any suggestions.

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Comstock has leased about 500 acres in the JW Dodson A-238 Survey. In addition, they recently permitted a well, the KN Jensen 1H, in which the lateral is planned to run into the northeast quadrant of the Dodson Survey.

You said you had a lease offer from Sun Valley…was it actually Surprise Valley? They’ve done a lot of leasing for Comstock in Leon County.

Assuming your acreage is not in the unit for the Jensen well, there is still a good chance it could be included later when infill drilling takes place. The fact that you were offered $15,000 for your 1.5 acres suggests that it is likely.

Here are some ballpark numbers about your royalty potential. Comstock’s first well in this deep gas play, the Circle M Allocation 1H, has produced about 18.9 billion cubic feet of gas during its first three years of production. The reported gross revenue from gas sales is about $66.7 million. A 25% royalty would be $16.7 million. The unit is 1,150 acres, so if your 1.5 acres had been included, your share of that royalty would be 1.5/1150, which equals almost $22,000 in three years.

Keep in mind that there are no certainties. Your 1.5 acres may never be included in a unit, gas prices may drop, etc. In addition, production drops off steeply after the first year, so royalty growth will be much slower.

One last comment: It is an absolute necessity to get a cost-free royalty in this play. Comstock controls the pipelines and the treatment facilities in this area, and the marketing costs are currently running about $1.07/MCF with the realized gas sale price running around $3.00/MCF. Without a cost-free royalty, you will lose about 33% of what you could have had, and you don’t want to do that!

Good luck! By the way, other mineral owner have negotiated 25% royalties with Surprise Valley. If they push back, just point out that your 1.5 acres is tiny and unimportant in the overall financials.

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You can easily get a 1/4 royalty and a minimum of $1,000/net. mineral acre for a 3 year lease with no options. A cost free royalty or as near to it as you can get. If they don’t lease it someone else will and you will get your price. A good lease form is a must. Hang tough! Good Luck. Get a cashier’s check when you lease it, DON’T SELL

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I have a lease with Surprise Valley that ends at the end of this year. I may be included in the big horizontal wells that they have recently drilled South of Jewett. My lease (that I inherited) is for 20%, and I would love to get that to 25. Assuming that they will need to renew the lease due to no production yet (may not happen), who else could I negotiate with to up the %. I spoke to the landman for my mother, and asked for 25% but was told no. I figured my measly 58 mineral acres weren’t enough to negotiate with but it seems I was wrong.

What abstract is your lease for?

A. Jackson. Is that correct? I don’t know proper terminology.

Currently Comstock has a few Horizontal wells being being drilled in A. Jackson (A-437). The Brown Trueheart BB (api# 289-32203) well and the BlackBurn BW well (api# 28932202) are located in that abstract. Another well, Hutto Rodell (api# 289-32198) crosses the abstract. You definelty want to keep an eye on these. Looks good from what I can see so far.

There are now 2 new wells on that abstract A-437. New permits for the Jones LA and the Lotspeich BJ were just submitted on the TRRC site. That’s 4 wells now plus the one that’s crossing it.

Hi, I also have rights in A-437. Did you say earlier that you made visual contact of platforms on the premise? I live Fort Worth and would love to drive down and see them too. Let me know if you can provide the locations. Thanks.

I have not seen if they are drilling wells on A-437. I do not have minerals on that abstract so I have not looked. Sorry about that.

You stated that Comstock has a few horizontal wells being drilled in A. Jackson ( A- 437 ). Can you confirm that? Then you said " I have not seen if they are drilling wells on A-437. Can you explain?

I had allowed Surprise Valley Resources to lease inherited land but l don’t know much about it. My dad died and l inherited his property. Not sure what steps to take to make sure l’m getting correct dollar amount while leasing. I really need some help with learning in and outs of leasing land. I never plan to sell, because l want this land to go to my children.

Thanks for that post, will you elaborate a bit more on the sites in A-437, Brown Trueheart BB api#289-32203 and BlackBurn BW api# 289-32198. I am interested in platform verification, how far along they are, etc. Any additional information would be appreciated. Thank you.