What is the going rate for leasing Reeves County Texas?

Because I am getting very different answers on this I’m hoping to gain a better idea.

We have rights in Section 25 Block c-1 Reeves County Texas.

What is the going rate for LEASING mineral rights per MINERAL acre? Ive been told many times 20-30k per mineral acre. But now someone mentioned to me that is the rate to SELL not lease. To lease its more like 3k-5k per MINERAL acre.

Can anyone, provide me accurate information as we are new to this and are worried we will get screwed because we literally know nothing about mineral rights.

Also, if the above is the case and say if its $20,000 per mineral acre. We have 10 mineral acres. So thats a $200,000 sign on bonus?? Then monthly we would get 25% royalties off all produced oil correct? Does this sound right?

I cannot comment on the leasing rates since I do not have acres in Reeves, but you receive a bonus when you sign the lease. The royalty is after a well is drilled and will be according to a formula similar to net acres/gross spacing or unit acres x royalty. So you net is divided into the whole unit.

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It’s all about location, location, location. That’s what makes it so difficult to answer these questions. Most refer to “acres” as NET MINERAL ACRES, or “nma”. SOME refer to royalty acres “nra” as opposed to mineral acres. That’s always been confusing to me, so I insist on talking mineral instead of royalty. Just my preference. You might use the search feature on this site to your huge advantage to educate yourself on terminology and also to find discussions of interest. I would also recommend searching your BLK/SEC numbers and see what you come up with. Your best bet is to find people who own and are having a discussion about mineral interests in your vicinity to get a feel for what is a going rate. Keep in mind a lot of folks don’t like talking/posting about their holdings for everyone to see. Knowing nothing, as you said, can get you in a lot of trouble. But you can learn a lot on this site. You just have to realize how complex it all is and be willing to do your homework. And, last but not least, don’t feel pressured to rush into anything. Those minerals have been there a good long time and you need to learn enough to make wise decisions. And as to your last paragraph, yes, that’s right, if 25% is what your lease allows, and after whatever expenses you’re to pay according to the terms of your lease. Hope this helps a little… Linton

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There are multiple wells drilled there, are you sure you are unleased?

Yes unleased. PRI OPERATING has contacted us to lease.

Section 25 block c-1 What we were provided.

Did they say what bonus price they were offering?

Nothing yet…we are in the beginning stages. No talk of numbers yet. The landman from PRI is doing some leg work to verify some heirs in my tree. He did tell me once that is done they will be talking deals. Which is why ive been so active on here because I wouldnt even know what is good or bad. All I am hearing now is anywhere from 3-7k per mineral acre to lease. With nothing lower than 25% royalty. And if we were to sell, 20-30k per mineral acre.

My question is do we get retroactive pay from the time they have been producing and we werent found yet? This is all just so confusing

LDetter,

 The first thing I would reccomend that you do is to access the Texas Railroad Commision website and locate your property there.  Once you have done this, you can also see if there is any activity going on in your area of interest.  If so, you should be able to also access some data on drilling, testing, production, etc from there.
 After you have located your property and identified the activity surrounding your property I recommend that you hire either a registered "Landsman" or an "Oil & Gas" lawyer to aid you in your decision making.  They will do their best for what you hired them for.

My best regards,

Stephen Watkins

How do I locate my property there? I went on the site. Couldn’t find where to do so. Thanks for your assistance!

I leased some mineral rights in Lots 3-4, Block 16, Section 266, Toyah Valley Grape & Alfalfa Co. Subdivision, Block 13, H&GN RR Survey in Reeves County the first of this year. At one point I had three different landmen who wanted to lease the property and I had them bidding against each other. The initial offer was for $7K/nma. The highest offer I received was $12K/nma, and I thought it was a done deal, but when I was almost ready to sign the lease, they reneged on several lease modifications that they had previously agreed to. So I contacted the individual who had offered $11K and they agreed to the mods that I wanted. I signed that lease for $11K/nma with 25% royalty (three year lease, to be renegotiated if they have not drilled in that time). Royalty is normally 25% currently.

With respect to your question regarding retroactive pay, I have this to tell you: I have been told by an oil and gas attorney that, if an operator drills on a property where you own a percentage of the mineral rights and has not signed a lease with you, you are entitled to the full 100% of the receipts for the percentage that you own. That would include retroactively. However, you would not receive a lease bonus, and the operator can deduct (proportionately) the cost of drilling the well(s) and operating costs. So, if the wells are good, you could receive a lot more than the 25% royalty that they are offering. If the well is inferior or a dry hole, you would likely not receive any money from the situation (that is one reason that a lease bonus can be a good thing). On the other hand, if that occurs, you are not on the hook for any of the drilling costs, etc. Another downside to this scenario is accurately determining just what their drilling costs were. My suggestion in that situation would be to contact a good oil and gas attorney.

If they have drilled on the property where you own an interest, they will certainly be required to retroactively pay you proceeds.

Finally, I am a little surprised that the operator has not provided you with at least a preliminary lease and a bonus offer. I have had a couple of situations where I had to provide legal confirmation of ownership before the lease was signed, but no one ever refused to negotiate before all of the legal i’s and t’s were dotted and crossed. I had one instance where I leased some rights and received the bonus, but then the operator found that something was unclear in the records and I had to provide certified probate documents before I could receive the royalties. Sounds kind of funny to me.

Hope this helps.