My sister and I have the mineral rights to some acres in Converse County, and an oil company has offered us a three year lease with a two year option to renew (I assume it is their option). They are offering $175. an acre and 15% royalty. Not sure if the $175 per acre is per year, or just a one-shot bonus for signing. Is this a good price? We've already had an independant speculator offer us WAY LESS than that.
Also, if they have a lease for the oil, can we still also lease to a uranium company at the same time? I's think their work would interfere with each other.
Haven't seen the actual lease yet - this was an offer via phone and email. They will send a lease for our review if we say we are interested.
I my opinion the answer depends on where the minerals are located in Converse Co. The middle or northwest parts of the county seem to have more competion and, therefore, get higher compensation rates. The other part of the answer may be what else is out there. Do you have several companies trying to lease your minerals or just one? In the highly competative locations this offer is below current market. But if you are not in the sweet spot and this is the only offer you have, it may be a good enough proposal. I would highly recommend that you have a good O&G attorney review the lease. Look at issues like title warranty and pooling provisions. Also, the $175 should a one time payment for the three year term. There should be an additional payment if they exercise the extention. Rob
We only have one offer, but this may be because the oil company had to hire an investigator to find us. We have both married twice since we inherited the mineral rights twenty-six years ago, and I even live in a different state. I've finalky gotten the correct wording for an affidavit of identity to change our names/addresses, but I don't know how I can file it. I've gotten ahold of several attorney's there, and they have no interest in it.
As to what part of the county the land is in, it's near Douglas, near Highway 59 and County Road 43 (also called Walker Creek Road). It kind of in the middle on the east side of the county.
Rob said:
Shelley,
I my opinion the answer depends on where the minerals are located in Converse Co. The middle or northwest parts of the county seem to have more competion and, therefore, get higher compensation rates. The other part of the answer may be what else is out there. Do you have several companies trying to lease your minerals or just one? In the highly competative locations this offer is below current market. But if you are not in the sweet spot and this is the only offer you have, it may be a good enough proposal. I would highly recommend that you have a good O&G attorney review the lease. Look at issues like title warranty and pooling provisions. Also, the $175 should a one time payment for the three year term. There should be an additional payment if they exercise the extention. Rob
If your mineral interest is located close to the junction of 59 and the Walker Creek road, you are in a fairly good spot. From the terms of your offer, my guess is that this is coming from agents of Chesapeake. If the ownership of your minerals are highly fractured and not a large amount you may not have a lot of movement on the bonus amount ($175/acre). But, the going rate for royalties is 3/16 or 18.75%. In cases where there are a large amount of mineral acres with one owner, your lease terms for a three and two year lease may be more like a $1,000/acre and the 18.75% royalty. Other companies that may have an interest in that location would be Mack Energy, EOG and maybe Anadarko. That said, be aware that there is alot of forced pooling going on in the area (but don't let them threaten you with that) and it may be difficult for a non-resident to get a "top dollar" lease package. As always, just my opinion. Rob