Unsolicited offer to buy or lease mineral rights

#1

We recently received an offer to lease our 1,226.40 nma which is currently under a 5yr lease with Apache. The lease will expire 6/2020. Apache has been inactive so far.

What piques my interest is the lease bonus is 15x what Apache offered.

Is it normal for a company to make an offer like this while currently under lease? Also it seemed odd to me that they asked us to provide them with our royalty %, and apparently haven't done the footwork to know our total acreage and specific location of our Sections and Blocks.

The company is Nickel River Royalties, LLC

#2

With that much acreage, you best see a mineral lawyer. It could very well be that you are being asked to lease the royalty rights reserved in your Apache lease. If so, 75% the royalty rights you negotiated will be paid to the new lessee and your royalty rights will be cut from 25% of 100% to 6.25% of 100% should Apache or its assigns drill a well of any size that holds all of your acreage. The offerers may also be trying to tie up what rights you have left after leasing for 10%. If it quacks like a duck . . . . . .

A few of us have posted warnings on MRF dealing with this subject. I understand that law suits have been filed as well. Search on. You have valuable acreage both in size and location. Protect it and remember there is no free lunch for mineral owners.

Gary L Hutchinson

#3

Thank you, Gary.

I didn't realize you could lease the royalty rights, so that is helpful to understand what they are offer. Far better to wait and see whether Apache will drill and if not, what their extension offer might be before I start shopping.

Thanks again.

#4

That would be my recommendation especially if you have a clause in the lease that limits the indiscriminate holding of leasehold rights to all depths. 1226 acres is a lot to hold with a few acres in a well. Be aggressive. The meek may inherit the earth but not the mineral rights so check for well completions periodically. Reply to my friend request and i will check on activity for you as i do for others.

Gary L Hutchinson

#5

Very unusual to top lease that far out. Make sure it is not a “royalty lease”. You can find many threads on royalty leases on this forum.

#6

I receive a letter from Nickel River Royalties recently. They had a generic offer of $7500 per nma for a 3-yr lease or $18000 per nma to purchase.