What is best choice for royalty?

I have mineral right property in Pittsburg county that I have been given an option lease/ assign interest for a 3 year term at $500 an acre bonus and 3/16 royalty or the same except $300 an acre with 1/5 royalty, or paying our share of drilling costs and participating in the well. We have 40 acres mineral rights. What would be the best choice

Personally, I would not sign anything at this point. In general, I go for the higher royalty and never participate. Get a draft copy of the lease and then ask tons of questions on the forum because that lease is probably going to need a lot of negotiation before signing. It will be in favor of the company at this point and many clauses will need to be changed before signing. Find out who they are leasing for, when do they plan to drill, what horizon, vertical or horizontal, when is pooling, etc.

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A lease with a great bonus and royalty might be a horrible lease depending upon the other terms. Also lease/assignment language must be carefully examined.

Isn’t Pittsburg county all natural gas wells?

Pretty much, yes; Dry gas, too.

Z28- It is my opinion that the best deal of the two is to take the $500/acre & 3/16ths. With Pittsburg County being predominately gas, prices are so bad now, and don’t look good for another 10 years, the offset in the additional 1.25% royalty will take many years to make the $8,000 difference. Get good lease provisions and take their money.

Todd M. Baker