Lease is up for renewal in Payne County what is going rate for acre lock down money 150 dollars, 200 dollars or what?: 3/16ths is fine with me on gas and oil payment just would like to know up front offer per acre anyone?
Come on members, help us with a reply here. Surely Ralph and I are not the only renewals coming up! Regards,
Steve Davis
It probably depends what section you are in, but I've seen $200 to $300 per acre bonus for 3/16 in various pooling orders in the county.
Thanks Dana! Any other observations out there? There has to be quite a few that leased out in 2010, that are starting new leases or renewing at this time. Oilfully, Steve Davis
Dana Brunson said:
It probably depends what section you are in, but I've seen $200 to $300 per acre bonus for 3/16 in various pooling orders in the county.
28=19N-4E
We are across the line East and North at 30-20N 5E. Were leased by Red Fork, Dec 30 2010, will take more than $300 to do it this time around. Will advise.
The lease-signing bonus is never a set amount. The landman who discusses the lease renewal with you will make the "base offer" authorized by the company he works for. That offer will be $X dollars per net acre signing bonus, and the royalty rate would remain the same as the first lease term. Then you begin to negotiate.
Let's say the base offer is $200/net acre and the lease currently has a 3/16 royalty. You can counter that you will take a 1/6th royalty in the renewal if the bonus is raised to $300/net acre. But if your tract of land is going to be all or part of the "drillsite" tract when they drill the well, you can pretty much command the signing bonus and get a 25% royalty on top of it. Thing is, you won't know if your tract is part of the drillsite tract until the well is drilled. And the landman won't know that either, because during the leasing phase of a project the geologist and geophysicist haven't decided yet where the best locations are in the prospect to hit the thickest part of the formation. I've seen drillsite locations get moved 3, 4, even 5 times before the drill bit bites the earth.
And here's some food for thought about whether the signing bonus is more valuable than the royalty rate. IF a well is drilled, and IF you have a 3/16 royalty, and IF you own 40 net acres in a 320-acre horizontal oil well that comes in producing 700 bbls of oil per day, and IF oil is going for $95/bbl at the time, you will be paid roughly 3/16 x 40/320 x $95 x 700 x 30 = $46,757.81 per month. But a 1/6th royalty would pay 1/6 x 40/320 x $95 x 700 x 30 = $41,562.50 per month. The signing bonus at $200/net acre would have been $8,000 to get the 3/16 royalty. The signing bonus at $300/net acre would have been $12,000 to get the 1/6 royalty. At 1/6th royalty, the first month of production alone could lose you $1,000, and then $5,000 every month after that.
But then--what if the renewed lease never gets drilled and it finally expires? You come out ahead taking the $300 instead of the $200 signing bonus. Life is one huge gamble, isn't it? But you have to choose, because if you don't you might get force pooled.
Thanks Marsha, But I don't think that is exactly the answer we were looking for. Again, would sure be nice to know what kind of bonuses are going out on current new leases and renewals. Thanks!! Steve Davis
Thanks guys for all the information, my problem is I would like to ask for more bonus money but there are 5 of us on the lease and I am the only one that has a slight Idea of what is going on the others are siblings and as the saying goes I do not want to make waves last time I mentioned bonus money was to low it started a bit of a problem so to keep peace I just go with the flow. This is a direct renewal from Calyx this time also they have told me that there is no drilling in the future at least out to April of 2014 on the land our lease covers, so good luck to me,my concern is the lease will out live me I am almost 70 and three of the siblings are in their 30s and 40s.
Hello Ralph, You leased at $100 originally? If so, you might only hope to double that on a renewal. You might also check your lease contract, it may have some terms there related to the renewal rate. I spent quite a bit of time, searching this site and others and not seeing anything in our area over $300. But I may be missing something. My lease ended yesterday, so I am starting over again. I have been trying to get a good reply to this question for over a week now. They are poking holes in the ground all up and down VFW or 5700 road, so sooner or later they will drill your place and mine too!
Hello Steve,bonus was originally $75.oo and acre now double to 150.oo acre which I will settle for because of five of us on the lease and I do not want problems from them, the lease itself is great 3/16th on both oil and gas and Calyx has a clause in the lease that every time that it runs out they have renewal option but the bonus money must double they have all ready cut one bonus check to my sister in Tulsa and right on the check in states renewal,I have not received one as yet however I reside in Idaho. Back to Calyx I talked to a very nice young lady on the phone about a week ago and she stated that they have no plans at least out to April to drill in the area where our lease is at,I do hope they drill sometime since I am nearing 70 and would like to have a little extra, to spend, oh well can all ways pass the mineral rights on to my granddaughter, any way thanks for all the information and the time you have taken.
Hi Ralph! The 3/16th bit will help you if they drill and get a successful well.. The bonus, is good to have regardless as it does make up for the dry times. Good luck to you on getting a good well !!! ..They are drilling all around me, yet we don't have a lease on our 200a. mineral interests as yet.